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Egypt's impact on global markets was made all the more poignant by two arbitrary milestones Wall Street failed to surpass. Putting the cart before the horse, the Dow Jones industrial average was, in fact, nestled next to the 12,000 point mark, a barrier it had not crossed since June 2008 and the Standard & Poor's 500 index was less than a point from 1,300, when civil unrest in Egypt rattled investors around the globe.
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The quick explanation is in the oil market and a simple phrase that begins "I don't know," as in what is going to happen in Egypt?
This simple scenario is playing itself out around the world. Not meaning to be cute, but when an investor calls his broker and says, "What is going to happen in Egypt?" and the answer is "I don't know," investors invariably pull back.
What is known is that the price of oil bolted Thursday, jumping more than 4 percent to nearly $90 on the possibility unrest in Egypt could prompt closure of the Suez Canal, which is a bottleneck in the Middle East oil distribution system. About 2.6 percent of the world's oil supply or 2.9 million barrels of oil per day passed through the canal in 2009, The New York Times reported.
Granted, for many, this represents tail-wagging-the-dog reporting. If the government in Egypt is failing, foremost on your mind might not be the price of some upstart in Silicon Valley. On Wall Street, The New York Times reported Monday, an unexpected disturbance beyond the focus of standard valuation is known as an exogenous event -- a volcano that erupts and forces airlines in Europe to shut down, for example. By definition, that's exogenous.
Credit rating companies were force to play the nearsighted schoolmarm with Fitch and Moody's downgrading Egypt's debt, because, hey, if you're going to throw rocks in the street and everything, then we expect someone to clean up afterward or no TV this week.
But the repercussions went much further than that. The Dow Jones average lost 166 points Friday while the Standard & Poor's 500 lost 23.20 points or 1.79 percent. The Nasdaq composite index dropped even further, losing 68.39 points or 2.48 percent to 2,686.89.
On Monday, markets in the Middle East were mixed, faltering in Saudi Arabia and Beirut, but making up lost ground in Kuwait and Abu Dhabi, the Times said.
Elsewhere on Monday, markets were up marginally in China, Taiwan and Canada, but down in most other major markets. In Japan, the Nikkei 225 index lost 1.13 percent while in Shanghai, China, markets rose 0.13 percent. The Hang Seng index in Hong Kong lost 0.68 percent while the Sensex in India fell 1.54 percent.
In midday trading in Europe, the FTSE 100 index in Britain dropped 1.4 percent while the DAX 30 in Germany lost 0.74 percent. The CAC 40 in France shed 1.41 percent while the Stoxx Europe 600 slid 0.86 percent.
