Investors now fear fiscal cliff more than weak economy

 

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In the September poll, 33% of money managers, who invest $681 billion for clients, said the eurozone's debt crisis is their top fear, down from 48% in August. Eclipsing Europe and ascending to the No. 1 global fear was the fiscal cliff, which got a 35% vote.

Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, says, "The upcoming election is putting these fears into sharper focus."

In the short term, investors likely will focus on government and private data that shows whether the economy is gaining strength. On Wednesday, the main piece of economic data out of the U.S. are reports on new starts for residential housing and existing home sales figures.

Adam Cole, an analyst at RBC Capital Markets, said the reports are "likely to continue the picture of very moderate trend improvement."

Europe's brighter outlook follows steps taken recently by the European Central Bank to stem the crisis. On Wednesday before U.S. markets opened, the FTSE 100 index of leading British shares was flat at 5,871 while Germany's DAX was down 0.1% at 7,342. The CAC-40 in France was also 0.1% lower at 3,508.

Earlier in Asia, stocks were generally fairly buoyant after the Bank of Japan's easing announcement. Japan's Nikkei 225 stock index rose 1.2% to 9,232.21, its highest close in more than four months

Hong Kong's Hang Seng climbed 1.2% to 20,841.91 and Australia's S&P/ASX 200 added 0.5% to 4,418.40. South Korea's Kospi gained 0.2% to 2,007.88. The Shanghai Composite Index rose for the sixth straight trading day, up 0.4% to 2,067.83. The Shenzhen Composite Index gained 0.7% to 865.73.

In currency trading, the BOJ announcement had little impact. The dollar was up only around 0.1% on the day at 78.93 yen. Meanwhile, the euro was more or less flat around $1.30. The euro has enjoyed a stellar few weeks as concerns over Europe's debt crisis have eased somewhat, largely on the back of a new bond-buying plan from the European Central Bank.

In the oil markets the benchmark New York rate was down 37 cents at $94.92 per barrel in electronic trading on the New York Mercantile Exchange.

Contributing: Associated Press