Initial panic selling in the aftermath of the Paris terror attack sent European stocks lower at the start of the week. UK and German markets have rebounded into positive territory within the first hour while French stocks remained in the negative.
It’s not pleasant analysing a human tragedy for its financial implications but it’s a necessary evil for those with or managing money in financial markets. The response from politicians including those in France and at the G20 summit in Turkey is typical in its grotesque opportunism, using the tragedy to push existing agendas. In the light of the downing of the Russian airliner, it seems likely there will be more air strikes and more attacks like those seen in Paris, which has the potential to be an ongoing source of unease for markets.
The kneejerk reaction has been to seek safety from further potential terrorist fallout in Gold, which is rebounding from near five-year lows. The resulting strength across the basic resource sector from higher gold and Oil prices is the main reason the FTSE 100 turned green after the initial Paris attack-induced sell-off.
The possible re-introduction of border controls and other tighter forms of security as well as the potential knock to traveller confidence has sent travel and leisure stocks lower. Air France shares dropped sharply, dragging shares of Easyjet and IAG (L:ICAG) down with them. Travel companies such as Tui (L:TUIT) and luxury brands such as Burberry are top fallers on the potential impact the terror attack could have tourism, typically a large source of demand for luxury goods.
Retailers including B&Q-owner Kingfisher (L:KGF) and Dixons Carphone (L:DC) have dropped on a report highlighting the cost to retailers of customer returns following the ‘Black Friday’ sales event. Black Friday by its nature encourages spur of the moment purchases, which are more likely to be returned in the cold light of day.
After an early sell-off in index futures following the Paris attacks, US stocks look set for a slightly higher open on Monday. Earnings season is winding down but a few notable reports are expected this week, including Urban Outfitters (O:URBN) and JD.comon Monday.
USA pre-opening levels
S&P 500: 1 point higher at 2,024
Dow Jones: 6 points higher at 17,251
Nasdaq 100: 7 points higher at 4,509
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