Paris attacks seen causing short-term global markets drop

Sun Nov 15, 2015 4:37pm EST
 
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By Christopher McCall, Hideyuki Sano and Lionel Laurent

SYDNEY/TOKYO/PARIS (Reuters) - Global stocks are set for a short-term sell-off on Monday after Islamist militants launched coordinated attacks across Paris that killed 129 people, but few strategists expect a prolonged economic impact or change in prevailing market directions.

If anything, any initial damage to economic confidence, tourism and trade within Europe will likely reinforce the European Central Bank's resolve to ease monetary policy further next month, they reckon. That will keep pressure on the euro exchange rate and support other European asset markets.

French financial markets will be open as usual on Monday, stock and derivatives exchange Euronext said on Saturday.

With many Parisian restaurants and shops shut on Saturday and Sunday, some local analysts expected any French equity reaction to be more visible than after January's attacks against the Charlie Hebdo satirical magazine and a Kosher supermarket.

"Stocks that are angled toward consumer goods or tourism, notably the luxury industry with the Christmas season, could be affected," said IG France analyst Alexandre Baradez.

"The January (attacks) were different, they were more targeted. Here they were aiming at an entire population," he added. "There may also be a purely psychological effect that pushes investors to stay on the sidelines until more clarity emerges."

Mohamed El-Erian, Chief Economic Adviser at Allianz, said, "With the horrible tragedy leading to some short-term restraint to French GDP, equity markets are likely to open lower with both government yields and the euro falling."

Concern about similar attacks beyond France and tensions surrounding a stepped-up Western military response to actions of Islamic State point to some ripple effect around world markets.   Continued...

 
A woman holding an umbrella looks at an electronic stock quotation board outside a brokerage in Tokyo September 8, 2015. REUTERS/Issei Kato