Stocks rally and oil falls as Mubarak cedes power
NEW YORK |
NEW YORK (Reuters) - World stocks surged while oil prices fell on Friday after the resignation of President Hosni Mubarak in Egypt bolstered sentiment among investors who feared regional unrest could disrupt Middle East crude supplies.
U.S. stocks closed out their second straight week of gains, and emerging market stocks rose for the first time in the past seven sessions, as measured by MSCI's .MSCIEF index.
"Now that the risk of a violent transition in Egypt has abated, this gives room for the global economy to continue to expand," said Ralph Preston, a futures analyst with HeritageWestFutures.com in San Diego.
"The markets are saying Egypt may not be as big a risk at this point."
Market Vectors Egypt Index ETF <EGPT.P jumped 4.5 percent to $18.60 and setting a record for daily volume.
However, the U.S. dollar and government debt strengthened on worries about the transfer of power in Egypt and potential unrest in oil-producing countries elsewhere in the region.
Data that showed the U.S. economic recovery is gaining traction helped support the dollar, while nagging concerns about the European sovereign debt crisis weighed on the euro.
"There was concern that this could lead to rising commodity prices and a flight to the dollar and now some of that uncertainty has been removed," said Matthew Keator, partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
The U.S. Dollar Index .DXY, a basket of major currencies, rose 0.23 percent at 78.432, while the euro slid 0.35 percent at $1.3593.
Mubarak handed power to the army after 18 days of relentless protests caused support from the armed forces to evaporate. He was the second Arab leader to be overthrown by a popular uprising in a month.
The Dow Jones industrial average .DJI closed up 43.97 points, or 0.36 percent, at 12,273.26. The Standard & Poor's 500 Index .SPX gained 7.28 points, or 0.55 percent, at 1,329.15. The Nasdaq Composite Index .IXIC added 18.99 points, or 0.68 percent, at 2,809.44.
MSCI's all-country world stock index .MIWD00000PUS rose 0.2 percent, as did its emerging market component.
"It looks like the stock market is taking the news well," said Gary Thayer, chief macro strategist with Wells Fargo in St. Louis.
U.S. oil prices fell to a 10-week low. Although Egypt is not a major oil producer, the protests had stirred concerns about the flow of crude oil along a strategic pipeline and potential disruptions to the Suez Canal.
"There's still a lot of uncertainty, along with some cautious optimism," said Jay Suskind, senior vice president at money management firm Duncan-Williams in Jersey City, New Jersey. "If there's a sense that Egypt won't go in a semi-democratic (direction), and that the new power is unfriendly to the West, we could see some nerves on that."
Fears that the Egyptian uprising could spread turmoil to major oil producers in the region helped push ICE Brent crude futures above $100 a barrel for the first time since 2008.
U.S. crude futures for March delivery fell $1.15 to settle at $85.58 a barrel.
March ICE Brent crude pared gains to settle up 56 cents at $101.43 a barrel.
U.S. gold futures for April delivery settled down $2.10 at $1,360.40 an ounce.
U.S. Treasury debt prices rallied as Mubarak's resignation spurred safety bids for bonds and technical signals rekindled some appetite among inflation-wary investors.
The benchmark 10-year U.S. Treasury note was up 17/32 in price to yield 3.64 percent.
Despite a slight return in risk appetite, the dollar kept its gains and was up 0.23 percent at 83.45 against the Japanese yen.
"Egypt is now seen as a regional political drama and the market seems to think the risk of a fundamentalist takeover there is overblown," said Brian Dolan, chief currency strategist, at Forex.com in Bedminster, New Jersey.
(Reporting by Ryan Vlastelica, Robert Gibbons, Julie Haviv, Ellen Freilich and Frank Tang; Writing by Herbert Lash; Editing by Andrew Hay)
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