Black Rock says that the trouble in Egypt shouldn’t hamper the stock or bond market or cause long-term oil price increase.

Oil: A week of street protests in Egypt led to spikes in oil prices, approaching $100 a barrel, amid concern that the Suez Canal might be closed. While Egypt is not a major oil producer, it controls the Canal, which carries 1.8 million barrels of oil per day. The Sumed pipeline, which runs through Egypt, carries 1.1 million barrels per day.  But Black Rock points to 5.5 million barrels of spare oil capacity OPEC could bring to market to counteract any shortages because of transportation problems through Egypt.

Stocks: Within Egypt, stocks fell approximately 16% last week before the markets closed; other regional markets dropped about 5% before moving up again. In the United States, stocks had their biggest one-day decline in two months on Friday, but have since recovered.

Bonds: U.S. Treasuries rallied during the height of the equity market sell-off. “Many of the fixed income spread sectors in the United States, and in a number of the developed countries, still offer attractive value in our view,” Black Rock wrote.

Emerging and Frontier Markets. The rising costs of food, fuel, medicine, education and property prices in developing nations may lead to political unrest around the world. The unrest “speaks to the growing importance of country selection among emerging markets as correlations between those markets have been falling.” Black Rock wrote, warning against investments in countries “where autocratic governments are in place, income disparity is high, and inflationary pressures are surging, since the potential for instability will be a key concern. Still, we do not feel that current events are at the stage where they can act as a tipping point for global risk.”

Black Rock, despite its optimism, did not point to the unrest as a buying opportunity, unlike some observers. Jason Pride at Glen Mede, for example, said that “Geopolitical risk has historically led to temporary market weakness - opportunity for buyers.”

The key areas in the market that Egyptian turmoil is affecting are energy, gold, shipping, defense and commodities.

The focus on Egypt may have taken some of the pressure off of Europe, others note, as Italy's business confidence improved more than expected. Markets in India and the Philippines fell sharply.