World markets sink as protests escalate in Egypt
Traders work on the floor of the New York Stock Exchange on Friday. (AP )
Published: Jan 29, 2011 00:37 Updated: Jan 29, 2011 00:39
NEW YORK: Escalating protests in Egypt are jarring world financial markets. Stocks fell while the dollar and Treasurys rose as investors sought to reduce their exposure to risk.
The Egyptian government’s response to escalating street protests unnerved investors. The military was deployed in an effort to quell the largest challenge to Egyptian president Hosni Mubarak’s 30-year rule. The fall of the Tunisian government two weeks ago caused worries that other Middle Eastern governments could also be toppled.
Disappointing earnings reports also helped send stocks lower. The Dow Jones industrial average had its first down week after an eight-week winning streak.
The Dow fell 166 points, or 1.4 percent, to close at 11,823.
The S &P 500 fell 23, or 1.8 percent, to 1,276. The Nasdaq composite fell 68, or 2.5 percent, to 2,686.
Gold, silver gain
On the other hand, gold and silver prices rose as rioting in Egypt fed fears that the violence may spread to other countries in the Middle East.
Gold added $22.30, or 1.7 percent, to settle at $1,340.70 an ounce while silver rose 88.8 cents, or 3.3 percent, to settle at $27.919 an ounce.
Oil also gained ground. The price jumped $2 a barrel in less than one-half hour shortly after the White House expressed concerns over the Egyptian riots. The State Department advised Americans to avoid non-essential travel to Egypt, and many airlines canceled flights in and out of the country.
Benchmark oil for February delivery gained $3.70, or 4 percent, to settle at $89.34 a barrel on the New York Mercantile Exchange.
The uprising in Egypt comes after earlier protests forced out the president of Tunisia. Anti-government protests have also hit Lebanon and Yemen.
The situation prompted anxious investors to put more money into oil, gold and silver. The precious metals are considered safer places to park money during turbulent economic times.
“I think it’s just kind of the feeling that this could continue to spread, or just the whole nervousness about the region, not that there’s any specific cutoff of supplies or anything like that,” said Tom Bentz, energy analyst at BNP Paribas Commodity Futures.
Bentz said a lot will depend on what happens over the next few days. “Are we going to see a regime change? Are we looking at cutoffs of supplies? I think it’s just one of those things you have to watch closely,” he said.
Earlier Friday, the Commerce Department said the economy got stronger at the end of last year as Americans spent at the fastest pace in four years and US companies sold more overseas. In 2010 the economy grew 2.9 percent, the most since 2005. However that wasn’t enough to ease high unemployment.
Most energy and metals contracts settled higher.
Copper for March delivery rose 3.45 cents to settle at $4.373 a pound, March palladium added $3.50 to $817 an ounce and April platinum settled up $1.50 at $1,805 an ounce.
In Nymex contracts for March delivery, natural gas added 0.4 cent to settle at $4.323 per 1,000 cubic feet, heating oil rose 3.91 cents to $2.6942 a gallon and February gasoline gained 7.27 cents to settle at $2.4859 a gallon.
Grains and beans fell. In contracts for March delivery, wheat fell 20.5 cents, or 2.4 percent, to settle at $8.2575 a bushel, corn slipped 6.75 cents to $6.44 a bushel and soybeans lost 1.5 cents to $13.98 a bushel.