Scottish Daily Mail

Terror at­tacks set to weigh down shares

- By Ruth Sun­der­land

MAR­KETS are braced for a ner­vous ses­sion to­day af­ter the terror at­tacks on Paris.

Ex­perts warn that stock mar­kets could fall by 2-3pc this morn­ing and that the euro will come un­der pres­sure against the pound and the dol­lar.

The Paris Bourse is set to open for busi­ness as usual to­day with ad­di­tional se­cu­rity mea­sures to pro­tect staff.

In pre­vi­ous events such as the 2004 at­tack on Madrid and the 7/7 bomb­ings in Lon­don a year later, in­vestors ini­tially rushed into safe havens such as US gov­ern­ment bonds and gold.

Any re­ac­tion in share prices will be short-lived un­less there are fur­ther out­rages, an­a­lysts claimed.

‘This is very dif­fer­ent from 9/11 which was the first time some­thing like this hap­pened. Mar­kets were down more than 7pc then be­cause the event occurred in the early morn­ing and traders had all day to re­spond,’ said David Buik of bro­ker Pan­mure Gor­don.

‘This time it hap­pened af­ter mar­kets closed so peo­ple have had all week­end to digest the news. The mar­kets are in a bad state any­way so there will be some kind of a re­ac­tion but not a hys­ter­i­cal one.’

Sev­eral Mid­dle East­ern stock mar­kets that were open yes­ter­day were hit by sharp falls.

Global stock mar­kets have al­ready been pum­melled over the sum­mer by fears over the slow­down in the Chi­nese econ­omy and shares around the world were bruised last week by the fall in the oil price.

Traders are ner­vous over prospects of an in­ter­est rate rise in the US, though it is pos­si­ble that rate rises in Amer­ica and the UK may be de­layed fur­ther as a re­sult of the Paris atroc­i­ties.

The at­tack could lead to a slump in the frag­ile French econ­omy and take a toll on the eu­ro­zone as a whole.

Con­sumer con­fi­dence may suf­fer as a re­sult of the at­tacks if shop­pers in Paris and other big cities stay at home for fear of be­ing a tar­get. Tourism, which ac­counts for around 7.5pc of the French econ­omy, may be hit along with the leisure sec­tor.

Fig­ures pub­lished on Fri­day by of­fi­cial agency Euro­stat re­vealed that France ex­panded by 0.3pc in the lat­est three months, af­ter achiev­ing no growth at all in the sec­ond quar­ter. The Paris slay­ings will in­evitably prompt spec­u­la­tion it may hur­tle back into re­ces­sion.

That may force the Euro­pean Cen­tral Bank to pump in bil­lions of pounds of more freshly-minted QE money to sup­port the sin­gle cur­rency bloc.

How­ever, Howard Archer, econ­o­mist at IHS Global Insight, be­lieves France will avoid a re­newed slump.

‘As hor­rific as th­ese events are – and this is truly aw­ful – eco­nomic ac­tiv­ity does tend to be pretty re­silient,’ he said.

‘At the end of the day, peo­ple have to get on with their lives. And that is the best way of putting up two fin­gers to the ter­ror­ists.’

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