Saturday, August 6, 2011

Saudi stock market first to plunge on S&P downgrade of US debt: Will other markets begin plunging come Monday?

Saudi Arabia's stock market dropped 5.46pc on Saturday as it became the first exchange to react to the historic US credit downgrade.

The Tadawul All-Shares Index closed down 350.43 points 6,073.44 as all shares tumbled following a tumultous week for global markets which was capped by Standard & Poor's cutting the US credit rating over its $14.3 trillion deficit and debt.

"The S&P rating and problems in Europe... have scared investors," said financial analyst Abdulwahab Abu Dahesh.

The Saudi market was the first to react globally to the S&P statement late on Friday, with the start of the trading week in Saudi Arabia, while all other markets remained shut for the weekend.

Analysts expect markets in Asia and Europe to follow the Tadawul lower on Monday.

"Saudi shares have reacted to two events: sharp drops on Thursday in markets, especially oil, and the S&P cut of the US rating," economist Mohammed al-Omran told Al-Arabiya news channel. (more)