The Dubai market posted its biggest one-day fall in more than a year while Abu Dhabi recorded its largest ever drop, on the first day of trading since the Dubai debt crisis hit.However, European markets avoided major turbulence and closed only slightly down. Robert Halver is from Germany’s Baader Bank: “The liquidity machine in Dubai and the United Arab Emirates are running on all cylinders, as expected, so there is no new confidence crisis. That’s the last thing we need. Now I think they are ready to put their own house in order.” Sunday’s announcement that the UAE central bank was setting up a facility to provide banks with extra liquidity across the Emirates, including foreign banks, did the job by reducing fears and fallout. François Cholet from Montségur Finance said: “For the last few weeks markets, including the CAC40, are hitting against a number of resistance points. It was hard to go above 3,900 points and any pretext could have sparked a fall. But now we can consolidate. We’re back today in an area of about 3,700 points, that’s relatively stable.” The repercussions of Dubai’s debt crisis is making it more expensive for countries already carrying debt to sell it, with Greece and Latvia already being hit hard as their debt gets ever more costly.
European markets hold firm in wake of Dubai debt crisis