Paris attack likely to impact France’s tourism industry
France has the largest number of tourists in the world and the sector accounts for almost 7.5 per cent of GDP.
“Given that France has a big tourism industry there may be some damage to the economy if this leads to a fall in visitors to France, or in tourism in general after the crash of a Russian plane,” said Hidenori Suezawa, financial market and fiscal analyst at SMBC Nikko Securities.
“I do not expect this impact to go so far as to affect the Fed’s monetary policy though at this point.”
Europe has suffered similar coordinated attacks on public transport systems previously, in Madrid in 2004 and London in 2005.
Almost 250 people were killed and more than 2,500 injured in those bombings on trains and buses by Al Qaeda-inspired militants.
“The knee-jerk reaction in other terrorist attacks over the last decade has been a rush to safety, including aggressive buying in the US Treasury markets,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.
“I sincerely hope these attacks will prove short in duration and will abate in intensity, in which case the market reaction will likely only include a brief safety bid in Treasuries.”
US 10-year Treasuries notes yielded 2.273 per cent at Friday’s close. The euro ended the week little changed at US$ 1.0777, and is down 11 per cent this year against a resurgent greenback.
French financial markets will be open as usual on Monday, stock and derivatives exchange Euronext said. — Reuters