Despite the debacle in Dubai, US investors seem more concerned with domestic issues than debt defaults in the Gulf.
With a better than expected performance from the Chicago purchasing managers index and news of a 0.5% rise in US consumer spending over the weekend, the Dow Jones Industrial Average has moved around 30 points into positive territory in early trading. The weekend includes Thanksgiving and the so-called Black Friday and traditionally marks the beginning of the traditional Christmas shopping season.
All this has helped pull the FTSE 100 off its lowest levels, and the UK index is now down 12.40 points at 5233.33. Investors are still nervous about the problems in Dubai, however, especially since there is as yet little clarity about how much could potentially be lost. Banking groups with exposure to the region are therefore among the biggest fallers, with Lloyds Banking Group 1.89p lower at 56.71p and Royal Bank of Scotland down 0.57p at 34.155p. David Buik at BGC Partners commented:
I would be very surprised if British, European or US banks had not made provisions for bad debt on their exposure to property in Dubai, in the wake of what they have experienced across the world in the last two years. I think what has transpired is a severe backlash from disinformation, poor public relations and discourtesy to world financial markets. They vented their spleen on Thursday to some considerable effect, but to date, the follow through has been rather muted. There bound to be gyrations. Market sentiment has been screaming for a correction but I suspect that this is only a catalyst and there will be other nuggets of news which will drive markets down.
