Mideast markets fall after U.S. credit downgrade

CBS/iStockphoto

DUBAI, United Arab Emirates -- Stocks tumbled across the Middle East on Sunday as most regional markets opened for their first day of business following a historic downgrade of the United States' credit rating.

Mideast markets mostly operate Sunday to Thursday. That makes them the first to react to credit rating agency Standard & Poor's decision late Friday to cut the U.S. level one notch to AA+ from its top AAA rating. The only exception is OPEC powerhouse Saudi Arabia, which plunged 5.5 percent when it opened Saturday.

The Dubai Financial Market's benchmark index suffered some of the steepest declines, plunging more than 5 percent in early trading before trimming its losses. The index was down 3.8 percent to 1,482 points by early afternoon.

Special Section: America's debt battle

While the S&P downgrade weighed on the market, it was also dragged lower by a lower than expected quarterly profit from Arabtec Holding, the Emirati construction giant that helped build the world's tallest tower in Dubai. Arabtec shares fell 4.9 percent to trade at 1.4 dirhams (38 cents).

Egypt's benchmark EGX30 index fell over 4 percent by midday local time, bringing its year-to-date losses to more than 32 percent.

S&P's cut could shake investor confidence in the world's largest economy and send tremors coursing through global markets. Traders worldwide are eagerly watching to see how far larger and more liquid markets in Asia and Europe react to the downgrade when they begin opening Monday.

Financial ministers from the Group of Seven leading economies were preparing to hold a teleconference likely before Asian exchanges open to discuss efforts to stabilize world markets.

Other Gulf markets also opened sharply lower. The Abu Dhabi index slumped 2.5 percent, while Qatar's market shed 3 percent.

Farouk Miah, an analyst at NCB Capital in the Saudi capital Riyadh, said Mideast traders are concerned that debt problems in the U.S. and Europe could drag on oil-dependent economies in the region.

"A lot of people were expecting a downgrade. I think the bigger concern is the oil price falling" because of slumping demand in the West, he said.

Saudi Arabia's stock market was the only one in the region to open Saturday. The Tadawul's main index edged slightly higher Sunday, creeping up a tenth of a point following the previous day's rout.

Miah attributed the uptick to day traders looking to make a quick profit, not a sign of renewed confidence. He expects Mideast markets to slump further if other global markets tumble on the U.S. debt downgrade.

In Israel, the Tel Aviv Stock Exchange delayed the start of the week's first session after pre-market trade showed the benchmark index dropping more than 6 percent because of concerns over the U.S. debt rating cut.

Exchange spokeswoman Idit Yaaron said the start was pushed back by 45 minutes "so market players will have time to react logically and not under pressure." It tumbled 5.7 percent amid heavy trading to trade at 1089 points by late morning.

[tryhonesty]

RepubliCON addiction to Big Oil and total lack of forward progress (never mentioning the hope for a brighter future). These Bozos give tax incentives to own gas guzzlers like Hummers. Hoover Depression, Tricky Dick Nixon sell out to China (look at the results today), Reagan the puppet for Very rich and powerful and resulting in the Bushs rise to power and decline of the United States. The Greedy OLD Party has so many accomplishments. They must be so proud to make America so WEAK. So much for the preservation of Freedom...

[jmailbox]

Excuse me, but how do you get the decline of the USA from Bush Jr. I know he spent a lot of money, just like Bill Clinton did in his 8 years.

But to totally ignore how much Obama has f**ked up on the debt deal by not taking a tougher stance, and let the S&P downgrade our credit rating. NO OTHER President will have that on their rap sheet

[jmailbox]

This is way i hate people who go the republicains are to blame.

Let's see now, in 2008 when the recession hit, gas was down to a historic $1.98/gallon (From $4.65/gallon in NJ). Where is the cost of a gallon at now? $3.65/gallon in NJ, or about a $1 short of 2008.

Correct me if i am wrong, but wasn't Obama in the office for the years of 2008 to 2011? He sat on his a** and did nothing for the gas prices.

What's worse is Obama signed a bill into law the "Credit Card Reform Act", which has hurt the consumers more be increasing the interest on credit card debt by 10-20% for consumers.

How are you supposed to get a economic recovery if the gas prices are still high, and the interest rate on credit cards is so high?

[tryhonesty]

Archie Bunker? Alive & well I see...

[nojoy01]

"In the last Great Depression energy was cheap."
---------------------------------------------------------------
In the last Great Depression everything was cheap. However, in 1932 the average price for a gallon of gasoline was $0.18 a gallon. (that's 18 cents per gallon) That price, adjusted for inflation in 2010, is $2.85 per gallon. Which isn't that far out of line when you realize that in 1932 there was NO sales tax of ANY kind on a gallon of gasoline. Add into the equation that todays' household incomes, adjusted for inflation, are more than twice as great as those for 1932 and it becomes obvious that Bottom line, energy is still cheap, relatively speaking. Big Oil's massive profits come from the fact that we use so much of the stuff.

[Imthaid2]

This is due to the repuppetcan's game playing. They do not care who they destroy as long as their billionaire buddies get more billions.

[tsigili]

The great imploding markets.......because the US is going bankrupt.

[nfission]

I can't wait until oil prices fall, gas prices are the biggest drag on our economy and no one in Washington seems to get it or care. We're going nowhere because all our energy costs an arm and a leg. In the last Great Depression energy was cheap.

[-LiftingSkirts-]

Maybe the streak of quarterly profit records being set by big oil are over...