Global Stocks Reverse After Paris Attacks

Global stocks reverse after Paris attacks

There seems to be no long-term effects on the economy after the attacks in Paris on Friday. The dollar rose and global equity markets gained. Also, the dollar rose against the yen due to the attacks on Paris. The sales of luxury goods and stocks that are geared towards tourism in the French capital may suffer, however. Paris attacks

Overnight, Asian shares were down as investors bought safe-haven assets such as gold, the yen, and low-risk government debt. Wall Street’s stock went up 1 percent, and the European shares made a comeback after there were earlier losses.

The attacks on Paris that left 129 people dead and hundreds wounded prompted investors to take risks, which resulted in gold rising from last week’s six-year low.“Expectations are that [the attacks] will have a modest potential economic impact,” said Eric Wiegand, senior portfolio manager at the Private Client Reserve at US Bank in New York.

Overnight, police raided the homes of suspected Islamist militants all over France. They arrested 23 people, and investigators identified a Belgian national living in Syria as the possible mastermind behind the attacks in Paris. French president Francois Hollande vowed to destroy Islamic State, the militant group claiming responsibility for the killings.

The Federal Reserve is expected to raise US interest rates in December.US gold delivery for December is up 0.3 percent at $1,083.60 an ounce. The euro is down at 0.87 percent versus the dollar at $1.0683.

Tourism-related stock declined, causing France’s CAC index to go down 0.08 percent at closing. Accor, a French hotel group, dropped 4.7 percent, and Air France dropped 5.7 percent. The luxury stocks fell a little less. Hermes and LVMH both fell 1.4 percent, and Kering dropped 0.7 percent. Tourists’ spending in Paris makes up a huge chunk of these companies’ sales.

London-listed shares of STOXX 60 Travel & Leisure fell 1.3 percent.“Paris is one of the most important cities worldwide in terms of luxury spending, and the timing is not good, too—a few weeks before Christmas, the most important period for retailers,” said Gregoire Laverne, fund manager at Roche Brune Asset Management. Paris attacks

MSCI’s all-country world index made a turnaround, gaining 0.6 percent. The FTSEurofirst 300 index closed up 0.2 percent at 1,460.75.

The attacks also had an effect on oil. Brent crude ended 9 cents higher at $44.56 a barrel and US oil rose up $1.00 higher to end at $41.74.

The vice chairman of hedge fund Omega Advisors, Steven Einhorn, stated that he expects US stocks to outperform bonds in 2016.He also told Reuters Global Investment Outlook Summit in New York that investors will come to accept a long-lasting US economic expansion with a friendly Federal Reserve.

Due to the concerns of the Paris attacks on Friday, US Treasury prices rose slightly. The benchmark 10-year Treasury notes rose 3/32 in price to yield a result of 2.2693 percent.

With terrorist attacks increasing in frequency, the effect on the market has not shown lasting repercussions.“The first reaction is panic, but then people take a look at the history books,” Andreas Koester, of UBS Global Asset Management, told the Wall Street Journal. Paris attacks

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