Global mar­kets re­silient in face of Paris at­tacks

Kuwait Times - - BUSINESS -

LON­DON: In their first re­sponse to the at­tacks in Paris, which killed 129 peo­ple, mar­kets proved to be more re­silient yes­ter­day than many an­a­lysts had an­tic­i­pated. Though Fri­day’s atroc­i­ties on the streets of Paris could hurt con­sumer sen­ti­ment across Europe in the short-term and raise con­cerns over longer-term geopo­lit­i­cal risks, in­vestors are so far man­ag­ing to hold their nerve. “In a sign of re­silience, there is no sign of the pan­icked trad­ing that could have been jus­ti­fi­ably ex­pected,” said Con­nor Camp­bell, fi­nan­cial an­a­lyst at Spreadex.

Af­ter open­ing mod­estly lower fol­low­ing the ear­lier re­treat in Asia, most stock mar­kets in Europe were trad­ing higher. Ger­many’s DAX was up 0.1 per­cent at 10,722 while the FTSE 100 in­dex of lead­ing Bri­tish shares rose 0.4 per­cent to 6,144. Even the CAC-40 in Paris had clawed back most of its early losses to trade just 0.2 per­cent lower on the day at 4,796.

Travel and tourism stocks were far­ing worst - Ger­many’s TUI AG was down 4 per­cent, while Bri­tain’s Thomas Cook fell 4.6 per­cent. Wall Street was poised to open mod­estly higher, with Dow fu­tures and the broader S&P 500 fu­tures up 0.2 per­cent.

Though stocks are hold­ing up over­all, there are some signs that in­vestors are con­cerned about the longer-term geopo­lit­i­cal ram­i­fi­ca­tions, par­tic­u­larly in the Mid­dle East, from which a large part of the world’s oil comes from. Gold, which in­vestors tra­di­tion­ally buy as a safe haven, was in de­mand - the price of an ounce was up 1 per­cent at $1,091. And a bar­rel of bench­mark New York crude oil was up 2.5 per­cent at $41.76 a bar­rel.

The at­tacks could also have an im­pact on the frag­ile econ­omy of France and Europe by dis­cour­ag­ing peo­ple from spend­ing on nights out, travel and en­ter­tain­ment. The euro was down 0.4 per­cent at $1.0733. “While not want­ing to sec­ond guess the ef­fect of the events of the week­end the clo­sure of France’s bor­ders, along with other se­cu­rity mea­sures, the im­pact on con­sumer con­fi­dence could well be con­sid­er­able in the com­ing days and weeks,” said Michael Hew­son, chief mar­ket an­a­lyst at CMC Mar­kets.

Con­sumer spend­ing was the main driver of eco­nomic growth for the 19-coun­try eu­ro­zone in the third quar­ter. The cur­rency bloc grew by a mere 0.3 per­cent, leav­ing it ex­posed to shocks.

An­a­lysts say the Paris at­tacks make it even more likely that the Euro­pean Cen­tral Bank will ex­pand its stim­u­lus pro­gram at the con­clu­sion of its De­cem­ber meet­ing. There’s even spec­u­la­tion that the at­tacks may be enough to put a brake on a rate hike from the US Fed­eral Re­serve in De­cem­ber, which would be its first in more than nine years.

“At this junc­ture, it is easy to see that the Fed’s in­ten­tions to ‘nor­mal­ize’ mon­e­tary pol­icy could be de­railed by a com­bi­na­tion of ad­verse do­mes­tic eco­nomic and ex­ter­nal events,” said Neil MacKinnon, global macro strate­gist at VTB Cap­i­tal. Ear­lier, the sell­ing was more pro­nounced in Asia, Ear­lier in Asia, Ja­pan’s bench­mark Nikkei 225 fell nearly 1 per­cent to close at 19,393.69. Aus­tralia’s S&P/ASX 200 lost nearly 1 per­cent to 5,003.80. Hong Kong’s Hang Seng fell 1.7 per­cent to 22,010.82, while the Shang­hai Com­pos­ite added 0.7 per­cent to 3,606.96. - AP

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