Global markets brace for short-term hit after Paris attacks
SYDNEY/TOKYO: Global stocks are set for a short-term sell-off today after Islamist militants launched coordinated attacks across Paris that killed 129 people, but analysts said a prolonged economic impact or market reaction was unlikely.
President Francois Hollande has declared a state of emergency, ordering police and troops into the streets, and set three days of official mourning after the attacks he called an “act of war” by Islamic State.
The carnage prompted condemnation by world leaders and outpourings of support for Parisians from around the globe, but would likely have only a knee-jerk impact on investment decisions, said Shane Oliver, chief economist at Australia’s AMP Capital in Sydney.
“History will tell us that if the economic impact is limited - and I think it will be - that markets will quickly recover and go on to focus on other things,” Oliver, who is also head of strategy at the A$156 billion (US$111 billion) wealth management firm.
While news of the attacks hit after markets closed on Friday, S&P 500 Index futures were still trading and shed about one per cent in light volume.
“If this had happened during market trading hours there could have been a panic but markets had a weekend to digest all the
History will tell us that if the economic impact is limited – and I think it will be – that markets will quickly recover and go on to focus on other things.
Shane Oliver, AMP Capital chief economist
information,” said Eiji Kinouchi, chief technical analyst at Daiwa Securities in Tokyo.
With Wall Street closing more than one per cent lower after weak US retail sales figures, Asian and European share markets would have been expected to fall even without the Paris attacks.
French stocks, particularly those exposed to the country’s large tourism sector, are likely to suffer the biggest falls.
“These Paris terrorist attacks and the larger scale of this attack could have a meaningful negative impact on the travel and tourism sector,” said Robert T Lutts, president and chief investment officer at Cabot Wealth Management in Salem, Massachusetts.
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