Egypt Strife Looks Like Bad News for Global Markets
Especially if unrest spreads, or oil prices continue to climb
By Evann Gastaldo,  Newser Staff
Posted Jan 31, 2011 2:34 PM CST
Anti-government protesters chat as others pray behind them in Tahrir Square in Cairo, Egypt, Monday, Jan. 31, 2011.   (AP Photo/Tara Todras-Whitehill)
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(Newser) – The political unrest in Egypt is sending shockwaves through the rest of the world, and causing widespread uncertainty in global markets. Though the US stock market has largely shrugged off other, similar unexpected events—the European debt crisis, rising interest rates in China—the situation in Egypt could have take its toll, especially if oil or other commodities continue to surge, the New York Times reports. Today, most Asian markets fell, while shares across Europe and the Middle East were mixed. Wall Street shares were higher, but the Dow fell 166 points Friday as the protests intensified.

Meanwhile, Egypt’s outlook has been downgraded to negative by both Moody’s and Fitch. The situation could be very bad news for a US economy that’s just recently appearing to improve. “A boxer never gets knocked out by a punch he’s looking for,” says one investment strategist. “This could be what triggers the decline. Geopolitical events are very, very hard to model.” Though Egypt is not an oil exporter, 2.6% of the global production of oil passed through its Suez Canal and Sumed pipeline in 2009, and events there can massively impact energy prices around the globe.

 

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