World stock markets fall on Egypt turmoil

Analysts believe the Middle East has now replaced the eurozone debt crisis as the primary concern in investors’ minds The political protests in Egypt have sent world stock markets falling and pushed up the oil price again. In London, the FTSE fell by 37 points to 0.6% to 5843 this morning, a seven-week low. International Airlines Group, formed by the merger of British Airways and Iberia, fell by nearly 4%, and holiday firms including Tui Travel and Thomas Cook also dropped. The Japanese stock market had earlier fallen by 1.18% to close at its lowest level in a month. There were also losses in Hong Kong and South Korea as the prospect of widespread disruption hit the markets. Gary Jenkins, head of fixed income research at Evolution Securities, believes the Middle East has now replaced the eurozone debt crisis as the primary concern in investors’ minds. The situation in Egypt, where thousands of protesters continue to demand an end to Hosni Mubarak’s rule , also prompted ratings agency Moody’s to cut its rating on the country by one notch to Ba2. Moody’s also maintained a negative outlook on Egypt, citing “the recent significant rise in political event risk”. Middle Eastern stock markets had already registered hefty falls when they traded yesterday. The Dubai Financial Market dropped by more than 4%, led by property companies and the port operator Dubai World. Ben Potter, research analyst at IG Markets, predicted that the current geopolitical uncertainties could send shares lower in the days ahead. “After Friday’s sharp drop in US equities, Asian traders had their turn to focus on the uneasy and tense situation unwinding in Egypt with protests continuing despite a cabinet reshuffle and additional army presence,” said Potter. The Dow Jones index had fallen 1.4% on Friday, with the Nasdaq down by almost 2.5%. Fears that the Suez Canal might be closed sent the cost of a barrel of Brent crude oil to a new 28-month high of $99.97. US crude also rose, to $90.80. If the canal was unavailable oil tankers would have to sail around Africa to transport oil from the Middle East to America – an extra 6,000 miles. Energy experts have argued that there is little chance of disruption to the crucial waterway linking the Red Sea and the Mediterranean. It is reportedly secured by armed guards – but this has not eliminated concerns over the region. “We cannot ignore the possibility that the chaos will spill over from Egypt into oil-producing nations,” Kenji Sekiguchi of Mitsubishi UFJ Asset Management told Bloomberg. Market turmoil Global economy Stock markets Egypt Middle East Oil Graeme Wearden guardian.co.uk

Posted by on January 31, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry