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Paris attacks: Markets in rocky start as France to open | Paris attacks: Markets in rocky start as France to open |
(35 minutes later) | |
Asian markets have opened lower, starting what is expected to be a global sell-off after the attacks in Paris on Friday night that killed 129. | Asian markets have opened lower, starting what is expected to be a global sell-off after the attacks in Paris on Friday night that killed 129. |
In Hong Kong the benchmark Hang Seng Index fell 1.96%, while in Japan, the benchmark Nikkei 225 index dropped 1%. | In Hong Kong the benchmark Hang Seng Index fell 1.96%, while in Japan, the benchmark Nikkei 225 index dropped 1%. |
Market sentiment was weak before the attacks, with the UK's FTSE 100 closing at a six-week low and Wall Street having its worst week since August. | Market sentiment was weak before the attacks, with the UK's FTSE 100 closing at a six-week low and Wall Street having its worst week since August. |
French financial markets will open as usual on Monday, Euronext has said. | French financial markets will open as usual on Monday, Euronext has said. |
A spokesperson for the stock and derivatives exchange said: "Our priority is the safety of our staff and there will therefore be extra security in place in Paris on Monday." | A spokesperson for the stock and derivatives exchange said: "Our priority is the safety of our staff and there will therefore be extra security in place in Paris on Monday." |
The euro, already under pressure from expectations that the European Central Bank could cut interest rates further next month, also fell on Monday. | |
It dropped to a six-and-a-half month low against the yen and fell 0.5% to $1.0710 against the dollar, nearing last week's six-and-a-half-month low. | |
'Negative impact' | 'Negative impact' |
As well as the recent lacklustre performances in the UK and US, France's Cac-40, the German Dax, and major Asian indexes had all closed down on Friday. | As well as the recent lacklustre performances in the UK and US, France's Cac-40, the German Dax, and major Asian indexes had all closed down on Friday. |
And French stocks, including those connected with the country's large tourism sector, could be most at risk of large falls, analysts say. | And French stocks, including those connected with the country's large tourism sector, could be most at risk of large falls, analysts say. |
The tourism sector accounts for about 7.5% of French GDP. | The tourism sector accounts for about 7.5% of French GDP. |
"These Paris terrorist attacks and the larger scale of this attack could have a meaningful negative impact on the travel and tourism sector," said Robert T Lutts, president and chief investment officer at Cabot Wealth Management told Reuters. | "These Paris terrorist attacks and the larger scale of this attack could have a meaningful negative impact on the travel and tourism sector," said Robert T Lutts, president and chief investment officer at Cabot Wealth Management told Reuters. |
"It is possible this could cause investors to take a bit more cautious stance on the higher risk sectors of the markets." | "It is possible this could cause investors to take a bit more cautious stance on the higher risk sectors of the markets." |
A decline in tourism in Europe could also weaken the euro, analysts warned. | A decline in tourism in Europe could also weaken the euro, analysts warned. |
And IG France analyst Alexandre Baradez told the agency that stocks "angled towards consumer goods or tourism, notably the luxury industry with the Christmas season, could be affected." | And IG France analyst Alexandre Baradez told the agency that stocks "angled towards consumer goods or tourism, notably the luxury industry with the Christmas season, could be affected." |
Hidenori Suezawa, financial market and fiscal analyst at SMBC Nikko Securities, added: "Given that France has a big tourism industry there may be some damage to the economy if this leads to a fall in visitors to France, or in tourism in general after the crash of a Russian plane." | Hidenori Suezawa, financial market and fiscal analyst at SMBC Nikko Securities, added: "Given that France has a big tourism industry there may be some damage to the economy if this leads to a fall in visitors to France, or in tourism in general after the crash of a Russian plane." |
'Rush to safety' | 'Rush to safety' |
Following the Madrid bombings in 2004 and London bombings of 2005 the Spanish and UK markets dropped by 2.2% and 1.4% respectively. | Following the Madrid bombings in 2004 and London bombings of 2005 the Spanish and UK markets dropped by 2.2% and 1.4% respectively. |
"The knee-jerk reaction in other terrorist attacks over the last decade has been a rush to safety, including aggressive buying in the US Treasury markets," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC. | "The knee-jerk reaction in other terrorist attacks over the last decade has been a rush to safety, including aggressive buying in the US Treasury markets," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC. |
Many analysts believe any economic impact will be short. | Many analysts believe any economic impact will be short. |
"As horrific as these events are - and this is truly awful - economic activity does tend to be pretty resilient. | "As horrific as these events are - and this is truly awful - economic activity does tend to be pretty resilient. |
`"At the end of the day, people have to get on with their lives," said Howard Archer, an economist at IHS Global Insight. | `"At the end of the day, people have to get on with their lives," said Howard Archer, an economist at IHS Global Insight. |
US equity strategist Sam Stovall said he expected stocks to start recovering after about a week. | US equity strategist Sam Stovall said he expected stocks to start recovering after about a week. |
"It's not something that's going to throw the European economy into recession," he said. | "It's not something that's going to throw the European economy into recession," he said. |