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The S&P futures are trading sharply lower pre-market due to global risk aversion with rising investor uncertainty. Today's movement comes in reaction to a negative shock administered by a debt scare in Dubai. As most investors know by now, Dubai World is requesting a debt restructuring of what could be up to $80 billion of credit. Although actual losses incurred are presently unknown, some European and UK banks could have considerable exposure. This week's news concerning Dubai's debt has shocked FX and equity markets as investors worry that the development may indicate forthcoming problems from other emerging economies. As a result, Asian markets have been under intense selling pressure, and European/U.S. equities look set to open sharply lower. Meanwhile, the FX markets are experiencing a broad based appreciation of the Dollar and Yen as gold crashes back below $1150/oz. Hence, it seems short-sellers have finally received the psychological trigger they were waiting for to unwind the bull-run in the risk trade. The question now becomes whether equities and currencies can stabilize before heading below more meaningful technical levels.
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