Oil falls, stocks edge up as Mubarak resigns
Oil prices fell and world stocks rose modestly on Friday after Egyptian President Hosni Mubarak stepped down following more than two weeks of popular unrest that roiled financial markets.
February 12, 2011 / 13:26 IST
Oil prices fell and world stocks rose modestly on Friday after Egyptian President Hosni Mubarak stepped down following more than two weeks of popular unrest that roiled financial markets.
Prices of gold and US Treasury bonds erased some of their gains as Mubarak's departure partially revived investors' appetite for risk. Many were still concerned, however, about the transfer of power in Egypt and potential new uprisings in other Middle Eastern countries impacting oil prices.The uncertainty kept the US dollar strong against other major currencies. Also supporting the greenback was data showing the US economic recovery is gaining traction."Initially you'll see a pop in the market and oil come off on the hope that this prevents violence in the streets of Egypt. But as we go forward, we'll start wondering what's next for the country," said Jay Suskind, senior vice president at Duncan-Williams in Jersey City.Mubarak ceded power to a military council, which will run the affairs of the Arab world's most populous nation. A free and fair presidential election has been promised for September.US crude oil prices, which had been rising on fears of potential disruptions in supply from the Middle East, fell USD 1.18, or 1.36%, to USD 85.55 per barrel.Key US stock indexes erased early losses to trade with modest gains.The Dow Jones industrial average was nearly flat at 12,229.82 while the Standard & Poor's 500 Index rose 1.77 points, or 0.13%, to 1,323.64. The Nasdaq Composite Index climbed 5.96 points, or 0.21%%, to 2,796.41.In Europe, the FTSEurofirst 300 index of top shares closed 0.41% higher. MSCI's benchmark All-Country World Index was little changed at 340.83 points."It looks like the stock market is taking the news well," said Gary Thayer, chief macro strategist with Wells Fargo in St Louis."One thing that has weighed on investor sentiment is that the price of oil would go up in the case of political turmoil, and Mubarak's leaving reduces that possibility."Despite a slight return in risk appetite, the dollar kept gains. It was rising 0.46% against a basket of major currencies, according to the US Dollar Index. Against the Japanese yen, it rose 0.29% to 83.50.A survey showing US consumer sentiment rose to its highest level in eight months in early Febry also supported the greenback as it suggested the US economic recovery was on track. Stronger economic growth may eventually translate into higher Treasuries yields and boost the appeal of the dollar.The euro fell 0.61% to USD 1.351, also pressured by a fresh bout of concerns about the euro zone sovereign debt crisis."There are bigger things driving the euro right now," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey."The concerns most heavily weighing on the euro -- the ongoing debt crisis -- are still there, and for now, the downside is still in play," he said.US Treasury prices shed some gains after Mubarak's resignation, but benchmark 10-year notes were still up 15/32 in price, with the yield at 3.6457%. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
