New Year exuberance

Global stock markets have followed new year celebrations by hitting recent new highs. But is the hangover on the way?

Equity markets kept up their New Year celebrations for four days. America's S&P 500 gained almost 5% last week. Britain's FTSE 100 reached an 18-month high. Pan-European stocks, as measured by the FTSE Eurofirst 300 index, have reached 22-month highs. Can they keep this up?

The optimism was due to the US government agreement over taxes and spending to avoid the fiscal cliff'. But as John Authers points out in the Financial Times, more stand-offs between Republicans and Democrats that could severely rattle markets are looming.

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