Global Market Wrap: European Shares Plunge For A Second Day
Equity Futures: Dow -213.00. S&P -28.80. NASDAQ -47.00. Japanese Nikkei -10.00. German Dax -7.00.
European Trade: The global equity markets continue to trade in the red for a second consecutive day after Dubai World said it is looking to delay payment on its debt. This had a strong influence on the financial market sentiment, sending investors into a risk-aversion phase.
European markets opened the trading session down almost 1%, but soon after the opening bell, the major European indexes started retracing some of the declines. Much of the selling seen in European trade was triggered by Dubai World’s possible default. Europe, and especially the U.K. has been seen as a safe investment haven by Arabic Funds, the same funds that these days are looking for liquidity rather than positions. This seems to have triggered strong asset sales, and id something that has the potential to destabilize the daily market momentum. Six out of the seven largest foreign investments in the United Arabic Emirates come from U.K. banks.
At the same time, S&P futures took a trip lower over the last two days of trading, plunging nearly 40 points from the 13-month high touched in Wednesday trade. However, the futures index retraced some parts of the downtrend after approaching a trend-line that has held the market since July 09.
Sector Moves: The healthcare and the food & beverage companies lost the most points in European trade. Interestingly, the heavyweight banks and carmakers added some points in Friday trade, after both sectors recorded very strong declines during the prior day of trading. This was best seen in the U.K. FTSE, were banks led the pack of gainers and the German Dax, where VW and BMW are trading up by 1.30%.
Energy companies also shed important points over the last two days of trade, as the problem that the UAE faces might force them to increase oil supply, thus lowering crude oil costs. In Friday trade, crude oil tumbled as much as 5%, which makes it one of the strongest sell-offs of the last few months. In European trade, the oil & gas sector shed 0.70%, with BP and ENI SpA shedding approximately 1%. Also affecting the commodity sector was gold’s sell-off, which has driven the precious metal as much as $50.
Economic Moves: Clear
Crude oil was recently trading at $74.10 per barrel, lower by $3.85
Gold was recently trading down by $33.80 to $1154.80.