World Stocks Fall Amid Concerns Over Egypt Unrest
World stock markets sank Monday as investors sought less risky investments amid anti-government riots in Egypt that are damaging the economy of the Arab world's most populous country and threaten to spread instability elsewhere in region.
Oil prices rose to near $90 a barrel as fears escalated that protests in the city of Suez at the mouth of the strategic waterway — a key route for oil tankers and cargo ships — could interrupt the flow of oil. In currencies, the dollar was higher against the yen but lower against the euro.
The demonstrators from all segments of Egyptian society have taken to the streets for nearly a week calling for the ouster of President Hosni Mubarak who has maintained a tight grip on power for 30 years. Jittery investors dumped Middle Eastern stocks Sunday, with the benchmark index for the Dubai Financial Market tumbling 4.3 percent to close at 1,543.02.
Major European bourses were down in early trading. London's FTSE 100 was 0.5 percent lower to 5,851.07. Germany's DAX was down 0.3 percent to 7,084.30; France's CAC-40 was down 0.6 percent to 3,978.01.
U.S. futures showed little fortitude ahead of the opening bell on Wall Street. Dow futures were down 0.1 percent to 11,760 while S&P 500 futures were flat at 1,271.90.
The picture was no better for many investors in Asia. Japan's benchmark Nikkei 225 stock average dropped 122.42 points, or 1.2 percent, to 10,237.92 — its lowest close since Jan. 3.
Selling spread across the board in Tokyo with Sony Corp. dropping 2.9 percent and Honda Motor Co. shares losing 1.4 percent after the automaker reported a nearly 40 percent drop in quarterly profit, hit by a strong yen and fading sales in Japan. Hong Kong's Hang Seng dropped 0.7 percent to 23,447.34.
Australia's S&P/ASX 200 shed 0.4 percent to 4,753.90. South Korea's Kospi slid 1.8 percent to 2,069.73 — its biggest one-day drop this year. Shares in New Zealand, India and Singapore were all lower.
But China's Shanghai Composite index gained 1.4 percent to 2,790.69 amid some last-minute buying ahead of the Chinese Lunar New Year that will shut down trading Feb. 2-8. The Shenzhen Composite Index for China's smaller, second market rose 1 percent to 1,197.67.
Taiwan's stock market was closed Monday due to the holiday. It will reopen on Feb. 8.
The dollar gained against the euro and the British pound on Friday as protests in Egypt continued, pushing investors to move to currencies they perceive as being safer bets. The Swiss franc and Japanese yen got boosts for the same reason.
"The Swiss Franc, Japanese yen and the U.S. dollar reprized their roles as safe haven currencies. Risk appetite is also low on account of thin liquidity because of the Lunar New Year holidays that start later this week," DBS Bank Ltd. in Singapore said in a research report. "At this juncture, Egypt is still viewed as an excuse to take profits on risk trades."
On Wall Street on Friday, the Dow Jones industrial average lost 166.13 points, or 1.4 percent, to close at 11,823.70 as the violent protests in Egypt prompted investors to sell risky assets like stocks for safer investments such as Treasuries and gold.
Disappointing earnings reports also rattled investors. Ford Motor Co reported earnings short of Wall Street's projections. Online retailer Amazon.com Inc. reported that higher costs cut its profit margins. And software giant Microsoft Corp. announced that the profitability of its Windows division was falling.
A weaker than expected report on the U.S. economy helped lead to a market sell-off as well. The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 3.2 percent between October and December, below the 3.5 percent that investors had expected.
In currencies, the dollar climbed to 82.10 yen in Tokyo from 81.99 yen in New York late Friday. The euro rose to $1.3605 from $1.3598.
Benchmark crude for March delivery was up 19 cents at $89.53 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $3.70, or 4.3 percent, to settle at $89.34 a barrel Friday.