Posted December. 10, 2009 08:47,
Global financial markets yesterday were rocked by the fiscal woes of Greece and fears over the spread of the Dubai debt crisis.
Worry is growing that default risk stemming from Dubai will spread to fiscally weak European nations and that Dubais debt crisis will be worse than expected.
Amid these negative developments, the U.S. Dow Jones Industrial Average fell 104.14 points (one percent) to close at 10,285.97 Tuesday. The U.K.s FTSE 100 Index dropped 1.65 percent, the German bourse fell 1.66 percent, and that of France fell 1.43 percent.
Due to the poor performance of the U.S. and European stock markets, the Shanghai Composite Index of China slumped 1.73 percent and Japans Nikkei sank 1.34 percent yesterday.
International credit appraiser Fitch Ratings recently downgraded Greeces sovereign rating from A- to BBB+, and Standard & Poors has put Greece on a negative credit watch. The Mediterranean countrys sovereign rating has fallen below A for the first time in a decade.
The Greek governments debt is expected to reach 125 percent of GDP next year.
Also rattling world markets was the reemergence of the Dubai credit crisis. News broke that Nakheel, the property unit of the troubled Dubai World, lost 3.65 billion U.S. dollars in the years first half.
Dubai World is negotiating with its six creditor banks to seek a delay in debt repayment.
The stock markets of Greece and Dubai each plunged more than six percent Tuesday. The Dubai financial market has plummeted a whopping 22 percent since the debt default announcement was made late last month.
In Korea, however, the benchmark stock index KOSPI rose 0.39 percent to close at 1,634.17 yesterday.