Is the Worst Not Really Behind Us?, Risk Aversion Dominates the Session

Yesterday’s global sell-off started in Asia, as news headlines showed that Dubai is now in serious problems and is requesting to delay its debts. The news had an immediate impact on the intraday session as pessimist immediately claimed that the emerging market is on the brink of bankruptcy.

According to Bloomberg news, Dubai world asked its banks to delay its paybacks as the government investment company burdened by $59 billion of liabilities. Furthermore, according to recent calculations, Dubai may owe Abu Dhabi Commercial Bank approximately $1.9 billion, among banks.

Stocks dropped across the globe, with the Nikkei and Stoxx 50, closing down by approximately 3.2%. Banking sectors felt the most pressure as investors feared that the news could send the recovering financial system back into mayhem.

When taking a glance at the chart below one can see that even though the bad news came from pressure, all the indices were affected including the German DAX



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