Market update: US Congress agrees fiscal cliff deal

In early morning trading the FTSE 100 is 1.5% higher and the FTSE Eurofirst 300 is up 1.3%. Markets have been boosted by news that the US Congress has finally found a resolution to the fiscal cliff. In the absence of a deal, automatic tax rises and spending cuts of $600 billion would have kicked in, threatening to tip the world’s largest economy back into recession. The drama was finally resolved through a bipartisan compromise which involved raising taxes for the wealthiest citizens.

The US stock markets were closed yesterday for the New Year’s Day bank holiday.