U.S. stock futures tumbled this Black Friday morning, as markets resumed trading after the Thanksgiving holiday only to join the world markets' selloff following the Dubai debt problems. With the markets open for half a day, only until 1:00 p.m. Eastern, trading could be thin, which may contribute to the downward move. For now, futures are indicating Wall Street is set to open sharply lower.The news about Dubai's debt problems broke late Wednesday when the government of Dubai acknowledged it had asked its banks for a six-month stay on its schedule of debt repayments for two of its flagship firms, as they begin restructuring. Dubai World has liabilities of $59 billion, its subsidiary Nakheel said in August, a large proportion of Dubai's total debt of $80 billion. As markets were struggling to figure out what kind of exposure banks had to Dubai debt, banks outside the Gulf played down on Friday their exposure to Dubai debt.
On Thursday, in response, stock markets were sent sliding across the globe, with U.S. markets spared on account of the Thanksgiving holiday. On Friday, selling resumed in global markets, with the U.S. ready to follow suit with many wondering why $60 billion rattles up markets so much when writedowns were measured in trillions of dollar. But confidence in the system is a big part of market moves, and this episode has managed to shake that somewhat fragile confidence that has been slowly building.
In Asia, Hong-Kong's Hang Seng Index closed down 4.8%, South Korea's benchmark plummeted 4.7% and Japan's Nikkei 225 Average skidded 3.2%. However, Europe seemed to have recovered from 3% declines on Thursday and on Friday showed minimal declines.
Not only equities were hit as a result, though. Commodities dropped the most since July, Treasuries and the dollar rose, and credit default swaps surged. Oil prices dipped below $74 a barrel Friday.
Meanwhile, in the U.S., Black Friday began, marking the beginning of the holiday shopping season. A number of stores, including Walmart (WMT) and many Old Navy and Gap (GPS) locations, opened on Thanksgiving, hoping to make the most of the extra hours. Online sellers also pushed deals on Thursday and even earlier in the week. Investors could get an early indication on how the shopping season will fare as the nation attempts to boost consumer spending again.
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Reader Comments (Page 1 of 1)
11-27-2009 @ 10:09AM
Beltway Greg said...
Non-issue unless you listen to CNBC. That's all they can seem to talk about. They've literally talked $60b to death. Europe is up.