Monday, November 16, 2015

Global markets nervous in wake of Paris attacks

The terror attacks in Paris are likely to push global sharemarkets lower today as investors confront a new layer of economic uncertainty.

Markets in Australia and Asia are set to open with a thud in the wake of the attacks and an earlier negative close on Wall Street before the carnage in Paris.

The All Ordinaries Index is set to open 37 points lower because of those combined factors according to the futures market.

But Shane Oliver, chief economist at AMP, told AM that while a kneejerk reaction is expected, markets are expected to bounced back after assessing the fallout.

"Terrorist attacks are horrible in terms of their human consequences and my thoughts are with those affected. But In terms of the impact on financial markets, there is no doubt that the attacks in Paris will contribute to short term investor nervousness," Dr Oliver said.

"But the experience with various Al-Qaida related attacks last decade is worth recalling - after an initial negative impact share markets bounced back as it was clear that there would not be a major economic impact and it seemed the effect on markets weakened as the terror threat continued.

"It only took just over a month for the US share market to recover from its 12% post 9/11 slump and it took the UK share market 1 day to bounce back from its 1.4% fall on the day of the July 2005 London bombings."

Global markets set to open in the red, according to futures, Source: Bloomberg

The French sharemarket and other bourses in Europe had already closed for the weekend before the Paris attacks occurred.

Wall Street also has ended lower on Friday US time because of some disappointing jobs figures restoked concerns about the strength of the US economy.

Analysts say markets in Australia and Asia were set to open lower anyway regardless of the Paris attacks but agree the loss of life, injuries and new uncerainty have the potential to damage investor confidence.

French financial markets will be open as usual late today Australian tijme but stocks exposed to the country's large tourism sector, are likely to suffer the biggest falls.

France has the largest number of tourists in the world and the sector accounts for almost 7.5 per cent of GDP.

Investors are likely to seek the protection of  bonds, cash and gold as markets assess the impact.