No break for re-elected President Barack Obama. In the midst of what should be a honeymoon victory Fitch Ratings agency called on the newly appointed head of state to quickly secure agreement on avoiding the 'fiscal cliff' and raising the debt ceiling, to retain its AAA status.
Likewise markets on Wednesday reacted negatively with the Dow industrials loosing more than 300 points in a sell-off as focus shifted to the US fiscal problems and the ongoing Euro crisis.
The Fitch communiqué stated that the economic policy challenge facing the President is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the US.
The agency also assured that the country's rating would be downgraded by 2013 if it fails to avoid the fiscal cliff, among other measures.
The fiscal cliff and an increase in the debt ceiling are pressing issues that the President and Congress must address in the coming weeks if the US is to avoid a fiscal and economic crisis. Fitch estimates that the fiscal cliff would tip the US economy into an unnecessary and avoidable recession and result in an increase in the unemployment rate to above 10% in 2013, it continued.
In the same line Wall Street saw all major stock indexes down 2%. The Dow Jones industrial average slid 312.95 points or 2.36% to close at 12,932.73. The Standard & Poor's 500 Index fell 33.86 points, or 2.37%, to 1,394.53. The Nasdaq Composite Index lost 74.64 points, or 2.48%, to close at 2,937.29.
European stocks fell sharply after bleak forecasts for the Euro zone economy and fiscal problems in the United States eclipsed initial relief over Obama's re-election.
In morning trade the FTSEurofirst 300 had hit a level not seen for nearly two months as the Obama win fuelled hopes the US Federal Reserve would maintain its loose monetary policy.
But the FTSEurofirst 300 closed down 1.4% at 1,099.35. Earlier, Japan's Nikkei recouped early losses, with Nissan Motor Co and Sumitomo Metal Mining rallying after they cut their earnings forecast less than feared. The Nikkei ended down 2.26 points, or 0.03%, to 8,972.89.