Anti-government riots in Egypt could destabilize the Middle East, keeping investors on edge.
There is a big worry that Egypt’s unrest could spread to other countries in the Middle East, which is home to the world’s top oil exporters, as a result we saw oil rise 4% higher on Friday.
So far more than 100 people have been killed in Egypt, after five days of protesting the government of Hosni Mubarak. Protesting in other nations has investors worrying about destabilization in the region.This is something that began in Tunisia and now spread to Egypt. There are other countries in a very similar position.
If a democracy movement manages to overthrow the Mubarak regime in Egypt, then reports so far suggest that a new government would not necessarily reject the country’s positive posture toward Europe, the United States and Israel, so crude oil would not be in jeopardy.
But if some radical group hostile to Western interests were to take power, then all bets are off, Energy prices will soar as the threat of reduced supplies, will lift oil and gas stocks.
The opposite will happen on industrial and consumer stocks, they will decline as investors bet on constrained consumption amid higher prices and fear of the future.
The Stock Markets in Egypt are closed and all world markets are red today. The Dow Jones industrial average broke an eight-week streak of gains on Friday and the S&P 500 and Nasdaq also ended with losses for the week.
The majority of companies continue to beat expectations of the 207 companies in the S&P 500 that have reported earnings, 71 percent have beaten analysts’ expectations, 102 S&P 500 companies are expected to report this week. It will be the impact of the outcome in Egypt that investors are focused on this week.
