 (CNN) – After mass defections within his own government following the deaths of hundreds of unarmed protesters, Libyan leader Moammar Gadhafi has pledged to hold onto power or “die a martyr.” Those words have had a calamitous effect on world markets. Stocks globally suffered their worst performance Tuesday in months; investors from Hong Kong to London and New York sold en masse as energy uncertainties ate away at world appetite for risk. The turmoil has pushed oil prices near two-and-a-half year highs, as the OPEC basket of crude oils rose above $100 a barrel for the first time since the financial crisis. Stocks of airlines like Delta, United Continental and U.S. Airways all lost more than 5% as airlines shed $2 billion in market value on Tuesday alone due to the specter of higher fuel prices. The VIX index, also known as the “fear” index in monitoring volatility in the markets, jumped in its biggest one-day gain since May, rising 27% on Tuesday.
With the Middle East in turmoil for weeks, why the strong market reaction now? As CNN’s Jim Boulden explains, Libya is an OPEC nation, with the largest proven oil reserves of any African country, and an important source for European nations and China: 32 percent of Libyan oil exports go to Italy, 14% to Germany, 10% to France and China, and 5% goes to the U.S. What hasn’t happened so far has been a protracted sell-off in the markets. The question today is whether the sell-off continues. “It could be the beginning of [a] correction because the markets have needed a catalyst, it’s needed a reason, and it’s not paying any attention to the macroeconomic data,” Kenneth Polcari, managing director for ICAP in New York, told CNN’s Felicia Taylor. “Markets have been up 40% since August and [economic] reports have been mixed at best. “What’s happening in the Middle East has begun that process – people are getting nervous, it seems like its spinning out of control,” Polcari said. So far, it appears traders have priced Middle East tensions into the market, hence no sustained sell-off. How might this be different? Gadhafi’s willingness to spill blood. “Look what happened in Tunisia, look what happened in Egypt – people protested, it was relatively peaceful … Libya is now out of control,” Polcari said. “News like today causes people to rush for the door.” And therein lies the question: As Asia wakes, markets are continuing to tumble. Is this the beginning of a protracted sell-off? |
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I have more salad servers with giraffes on the top than i know what to do with. Can't resist the haggling and bargaining
Enjoying biltong and wakaberry having spent too much on wooden animals at rosebank mall. I always end up dragging this stuff home
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updated 121 GMT, May 19
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Um, no - the Asian markets are holding steady. Corporate profits will stay high until commodities inflation starts to bite, and consumer confidence in the US is improving.
The correction stimulus will be when the Fed's quantitative easing fades out.
Venezuela and China doors are open.
China could have "contracted" all the oil fields in Libya when US arrives :)
and since when did ICAP become relevant ?
I always thought he was a Madman, Now we have heard him Bark! After Libya, if Algerian oil supplies get disruppted for any length of time, then expect Oil to reach $200 a Barrel, and $5.00 a gallon in the US!! Oouuchh!!!! Get your bikes tuned up and leave the cars in the garage.
The European leaders are doing business with the devil, a man that is clearly not on his right mind. A man that they obviously knew to perform unjust and e-moaral acts with the people of his country.
When it is convenient you become blind.
On the same time are coming with "moral demands" from other small middle eastern country, that does not have resources like oil.
And the "little people" thinks that it is about ideology.
Its all about money.
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