"Time is running out for the long-awaited solution in fiscal-cliff negotiations"
- Kai Fachinger, a portfolio manager at SAM Sustainable Asset Management AG
The Swiss stock market ended Friday's session in negative territory amid growing concerns that the U.S. lawmakers will fail to reach a budget agreement by the end of this year. The existing tax law expires in January 2013 and would lead to automatic tax increases and spending cuts in 2013. The Swiss Market Index (SMI) dropped 0.58% to 6,822.44, prolonging a weekly drop. Despite the decline, it has still rallied 16% this year as the European Central Bank and the Federal Reserve expanded bond purchases. In the meantime, the Swiss Exchange Swiss Performance Index tumbled 0.53% to 6,290.52.
"Time is running out for the long-awaited solution in fiscal-cliff negotiations," said Kai Fachinger, a portfolio manager at SAM Sustainable Asset Management AG in Zurich. "As the positions of the two parties are just too far off, it's likely to happen in the very last second. In a worst-case scenario, the negotiations will continue into early 2013 and stock markets will open very volatile into the new year."
"U.S. lawmakers will attempt to meet again on Sunday in a final attempt to ink out a deal to avert the crisis but markets are not holding their breath," Ishaq Siddiqi, a market analyst at ETX Capital, wrote in a note.
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