Markets fall as US debt committee fails

Markets fell sharply on the first trading day of the week with the MSCI All-Country World Index dropping 2.3 percent.

Markets fell as US lawmakers failed to agree on a plan to cut the budget deficit. Reuters reports:

Lawmakers abandoned their high-profile effort to rein in the country's ballooning debt on Monday in a sign that Washington likely will not be able to resolve a dispute over taxes and spending until 2013...

"Despite our inability to bridge the committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed and that we cannot leave it for the next generation to solve," Republican Representative Jeb Hensarling and Democratic Senator Patty Murray said in a joint statement.

There was no immediate impact on US credit ratings. Standard & Poor’s noted that $1.2 trillion in spending cuts will be triggered automatically while Moody’s Investors Service said the deliberations were “not decisive”.

Economic reports on Monday had been mixed.

US existing home sales rose 1.4 percent in October. The Chicago Fed National Activity Index rose to -0.13 in October from -0.20 in September but the three-month moving average fell to -0.27 from -0.16.

Earlier in the day, Japan had reported a trade deficit for October after exports fell 3.7 percent from a year earlier. Imports rose 17.9 percent in October from a year earlier.