Markets in the Middle East, where Sunday is a work day have shown what the invisible hand of the market thinks about S&P's Friday Downgrade of US Credit.
Let's just say, the invisible hand isn't exactly raising the roof....
The debt crisis in the United States, including the downgrading of the U.S. debt rating by a major agency, had a negative impact on the first day of the trading week in the Middle East. Stock markets in Dubai and Egypt dropped about four percent, and the effects were even worse in Israel.
The Tel Aviv Stock Exchange delayed its open by 45 minutes to avoid panic but it did not help. The market plunged by seven percent in response to the downgrade of the debt rating in the United States.
"It is a powerful shock," economist Yaakov Sheinin told Israel Radio. He said U.S. President Barack Obama and the Federal Reserve should do something to calm world markets.
Israel is in the midst of mass protests. All Middle East markets may be playing it safe as they don't know what the broader market reaction will be. However, these initial indicators do not bode well for Asian and Western markets today.
The New Zealand market has followed through with about a 3.5% decrease in early trading but has "recovered" to down 3%.
However, Nikkei Futures appear to be down by about 2%...we will see how they do as traders get to work over the next hour.
US Dow Jones futures are down by 258 as of 7pm EST.
Moody's apparently has stated that they are now reviewing their current rating. This was stated on CNBC World, but I have not found an internet source of the wire report.
It could very well be a bumpy ride but the retreat last week likely has limited the possibility of a major crash in a single day. It certainly makes on wonder if there was a "leak" last week.
I will provide a brief update once asian markets open.
UPDATE 8pm EST - Nikkei (Japan) and Kospi (South Korea) open down about 1.5%. I suspect the conventional wisdom would be "it could be worse" with many hoping this range holds through the day and middle east trading was an anomaly due to external forces.
Enjoy the evening. US and Europe will provide a final view of the initial market response, if any.