“Investors are showing resilience to the recent attacks in Paris despite mounting worries over security in Europe”, said B Capital Wealth Management Managing Director Lorne Baring, in London. In the past major terrorist attacks across the world, markets had recovered to the levels before the attacks.
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“It’s not something that’s going to throw the European economy into recession”, he said. The Nasdaq composite index slipped 77.20 points, or 1.5 percent, to 4,927.88.
Monday’s rally helped lift the market following its biggest weekly loss since August.
“Those attacks will definitely have a long-term negative impact on the tourism sector in France, and all sectors (which depend) on tourists, but it can not be measured yet although the market tends to forecast the worst case scenario”.
Travel, hotel and leisure stocks have fallen sharply across Europe in the wake of Friday’s devastating terror attacks in Paris.
The energy sector in the S&P 500 soared 2.7 percent, far more than the rest of the market.
On the macroeconomic front, the final reading on consumer price index for October showed 0.1% growth year-on-year last month, compared with a previous estimate indicating stagnant growth and with analysts’ expectations for an unchanged reading. And a barrel of benchmark NY crude oil was up 2.5 percent at $41.76 a barrel.
The euro hit a 6 1/2-month low against the yen and edged near 6 1/2-month lows against the dollar in Asia on Monday after the deadly attacks in Paris added to caution on the common currency.
UP WITH DEFENSE: Investors bid up shares in several defense contractors. Shares in Marriott lost 22 cents, or 0.3 percent, to $72.52. Raytheon rose $4.3, or 3.7 percent, to $121.56.
Travel-related stocks were down, while defence contractors moved higher.
LVMH and Kering fell by 1.14 percent and 1.15 percent, to stand at 160.55 euros and 163.40 euros respectively.
LOOKING AHEAD: The attacks may make it even more likely that the European Central Bank will expand its stimulus program at the conclusion of its December meeting, some analysts said.
Investors were selling as they worry that the Federal Reserve will hike interest rates next month.
“At this juncture, it is easy to see that the Fed’s intentions to “normalize” monetary policy could be derailed by a combination of adverse domestic economic and external events”, said Neil MacKinnon, global macro strategist at VTB Capital.
In Shanghai, Air China, China Eastern Airlines and China Southern Airlines each lost more than two percent, while tourism firms also retreated – China CYTS Tours Holding lost 1.28 percent and China International Travel Service fell 1.05 percent. Japan Airlines sank nearly three percent and rival ANA was 3.5 per cent off, while in Sydney Virgin Australia plunged 6.5 per cent. Indonesian flag carrier Garuda fell 1.3 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell almost 1.5 percent, its biggest daily fall since September 29, and was last down 1.2 percent.
France’s CAC 40 was down 1.12% in early trading, while Germany’s Dax dipped 0.86% and the FTSE 100 was down 0.25%.
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METALS: Precious and industrial metals prices closed mixed.
