European shares pause; economic impact light
Ken Odeluga November 16, 2015 2:46 PM
<p>European tourism and travel shares retreated on Monday as investors evaluated the impact on the sector from terrorism. However markets in the region were not […]</p>
European tourism and travel shares retreated on Monday as investors evaluated the impact on the sector from terrorism.
However markets in the region were not severely hampered overall.
The broad Stoxx Europe 600 index traded just 0.16% lower an hour into the session.
Paris’s CAC 40 was 0.4% lower, the UK’s FTSE 100 was 0.6% higher and Germany’s DAX was 0.1% into the black.
Whilst DAX and FTSE component TUI AG was down 4%, its relatively moderate weighting means its pull on those markets was slight.
Additionally, for London’s market, a rebound by crude oil prices, which dropped back to August lows last week, fuelled a similar bounce by energy stocks.
Some traders cited French strikes in Syria in response to Friday’s attacks in Paris as a reason for oil prices to recoup.
Air France, London-listed British Airways-owner International Consolidated Airlines, InterContinental Hotels, Paris-based Accor, and Eurotunnel, all traded 4%-6% lower.
There was also some read-across to Parisian luxury names, LVMH and Gucci-owner Kering, which were down 1.2%-1.6%, whilst the UK’s upper-bracket leader Burberry was lower by a similar amount.
In the medium-to-long term, little-to-no economic or financial impact from the weekend’s events in Paris expected.
It’s worth bearing in mind that global economies have tended to be resilient in the wake of terrorist atrocities in big cities in modern times.
After London’s 7/7 2005: UK private consumption rose 0.7% quarter-on-quarter, in line with the average of the previous 4 quarters.
After Madrid‘s 11th March 2004 attack near Atocha train station, Spanish consumption growth rose in Q2 2004 to 1.2% QQ after a Q1 dip to 0.6% QQ, before returning to previous trend thereafter.
After New York’s 9/11, in 2001, consumer spending briefly accelerated after the terror attacks to 1.5% QQ in Q4 2001 followed by a dip to 0.3% QQ in Q1 2002.
In the present case, already-prevailing factors are once again expected to have a stronger influence on European economies and financial markets than consequences from the heinous incidents over the weekend.
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