The weeklong rally on global markets fizzled out overnight after US politicians put up another roadblock to a deal that may avert the year end fiscal cliff.

The past few days had offered hope that House Republican leader, John Boehner, and President Obama, were nearing an agreement on resolving the budget standoff.

However, both sides took to the camera last night, criticising each other's respective proposals. The political posturing saw the Dow shed 99 points (-0.7%) to close at 13252. The Nasdaq let go of 0.3% whilst the S&P500 dropped 0.8%.

European equities fared better after an index tracking the business climate in Germany rose for a second month. The UK FTSE rose 0.4%, the German DAX climbed 0.2% and the French CAC put on 0.5%.

Oil surged 1.8% to US$89.51 as concerns over the fiscal cliff were overshadowed by a larger-than-expected fall in weekly US crude stockpiles.

In currency markets, the euro continued to strengthen against the greenback as the German business climate data eased concerns over the eurozone's largest economy. There are no major economic data releases scheduled for today.

Morning Market Update: Global Markets Fizzle is a post from: Australian Stock Report Market Pulse Blog