Luxury goods stocks in France were also under pressure, including Hermes.
Fund manager Gregoire Laverne at Roche Brune Asset Management told Reuters: “Paris is one of the most important cities worldwide in terms of luxury spending, and the timing [of the attacks] is not good too - a few weeks before Christmas, the most important period for retailers. These attacks will definitely have a long term negative effect on the tourism sector in France.”
But analysts at Societe Generale believe the effects on the luxury sector could be short-lived.
They said: “A negative short-term effect is inevitable – witness the sector’s low European/French sales growth in the first quarter (January Paris attacks), followed by a rapid tourist-led pick-up.
“The long term effect: negligible... if no further attacks: There should be limited lasting impact in a context where: a) economic growth is resuming at the macro level both in France and in Europe as a whole, and b) past history shows that such acts of terrorism as a rule have no lasting economic effects.”
On that note it’s time to shut up shop for the evening. Thanks for your comments, and we’ll be back again tomorrow.
European markets steady despite Paris attacks
The predicted slump in stock markets in the wake of Friday’s atrocities in France proved short lived. By the close of play in Europe most markets were in positive territory, with even France edging only marginally lower. Travel and leisure stocks came under pressure, inevitably, on concerns about the effect of the attacks on consumer sentiment, not to mention the prospect of border controls and increased security. But defence companies moved higher amid a step up in military activity in Syria. Commerzbank economist Peter Dixon told Reuters: “The markets have learnt to realised that the attacks tend to have very limited impact upon the economy and markets.”
Also adding support was the idea that the European Central Bank was even more likely to unveil further measures to stimulate the flagging eurozone economy at its meeting in December.
There was even some talk the attacks could persuade the US Federal Reserve not to raise interest rates next month after all, despite an increase seeming a near-certain bet. Neil MacKinnon, global macro strategist at VTB Capital, told AP Financial: “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,.”
So the final scores showed:
- The FTSE 100 finished up 28.10 points or 0.46%
- Germany’s Dax edged up 0.05% to 10,713.23
- France’s Cac closed down 0.08% at 4804.31
- Italy’s FTSE MIB dipped 0.14% to 21,811.36
- Spain’s Ibex ended up 0.13% at 10,124.5
On Wall Street the Dow Jones Industrial Average is currently up 93 points or 0.54%.
Back in Europe and nearly €2.3bn was wiped off travel and leisure shares by the close of play, as measured by the 23 constituents of the Stoxx Europe 600 Travel & Leisure Index:
Here’s the full report from Bloomberg on the comments from ECB board member Peter Praet:
Praet said the Paris terror attacks may pose a risk to the euro area’s sluggish revival and policy makers will need to monitor data on economic confidence closely.
“Usually these sorts of events have a transitory effect on the economy so this is not a priori a reason to change the way we see the evolution of the European economy,” Praet said in an interview with Bloomberg Television on Monday in Frankfurt. “It’s also true on the other hand that we have a fragile cyclical recovery, fragile with downside risk, and it’s clear these sort of events do not help restoring confidence in the recovery, so this is something we will watch.”
The ECB already plans to discuss fresh stimulus measures next month as a global slowdown in trade threatens to stem the currency bloc’s upturn and undermine an inflation rate that is stuck well below its goal....
Praet said policy makers will “closely” study incoming economic data, in particular consumer confidence, over the coming days and weeks. Euro-area confidence indicators are due to be released by the European Union’s statistics office on November 27. The ECB’s next monetary-policy meeting is scheduled for December 3 in Frankfurt.
Full report here.
Early stock market falls have encouraged investors to come back in and buy at the lower levels, said Chris Beauchamp, senior market analyst at IG:
Markets in Europe, the UK and the US have spent the day recovering losses, as investors digested the impact of Friday’s events. Most European indices started the day firmly in the red, but since then we have seen these losses disappear, to be replaced with dip-buying.
Across stock markets, travel firms have borne the brunt of the selling, with Carnival, TUI and Intercontinental Hotels all down in London today. Overall the economic backdrop has changed little from the end of last week, when indices took heavy losses, but it seems that once again many had simply been waiting for a sufficiently impressive run of losses to occur before buying once again.
Investors have been attempting to work out what the aftermath of the events in Paris will be. Concerns are rife that tightened border controls will lead to lower economic growth, thus prompting the ECB to boost and/or lengthen its stimulus programme. Expectations of more easing have kept the euro around the key $1.07 mark, with today’s inflation data doing little to hinder the view that the ECB will have to do more to boost the region’s economy.
The chief economist of the European Central Bank, Peter Praet, has told Bloomberg TV that the bank will be watching the next consumer confidence figures carefully in the wake of the Paris attacks.
The bank has already hinted it might take further stimulus measures at its December meeting, to boost the flagging eurozone economy. Any signs of weakening confidence could make such a move more likely.
After an early gain, crude prices are back in negative territory as worries about falling demand outweighed concerns about supply disruptions in the Middle East.
Traders said that the Paris attacks were likel to have an impact on travel and thus demand for oil, while news that Japan had fallen back into recession reinforced the general perception of a slowing global economy.
Meanwhile the average price of crude sold by Opec fell below $40 a barrel on Friday for the first time 2009.
At the moment Brent crude is down 1.6% at $43.76 a barrel.
Brent back to $42.5/bl lows? pic.twitter.com/f5KqmDVMUS
— Mike van Dulken (@Accendo_Mike) November 16, 2015
Updated
Wall Street opens higher
US markets have moved ahead in early trading, despite the Paris attacks, with investors seeming to believe they will only have a short term economic impact.
The Dow Jones Industrial Average is currently up 51 points or 0.29% while the S&P 500 has climbed arouind 0.5%.
Energy companies are providing some support, following an early rise in the crude oil price on concerns about supply disruptions.
Here’s some charts showing previous market reactions to acts of terrorism:
Impact of Terrorism on Stock Markets varies. Update describes the variables and what this means for SPX. . pic.twitter.com/cmFmtjqEtk
— Ed Matts (@EdMatts) November 16, 2015
€2.5bn wiped of European travel sector
Investors have knocked more than €2.5bn off the combined value of Europe’s largest tourism firms so far today.
Most of today’s selloff has been focused on companies on the Travel & Leisure portion of the STOXX 600 index, which has fallen by 1.5% today.
Here’s the top fallers:
This underlines concerns that this sector will suffer from lower consumer confidence - despite France’s determination not to be beaten.
Updated
French market drops back
After a resolute start, the French stock market has now dipped back into the red.
The CAC 40 is now down 25 points, or 0.5%, at 4,782.
Air France’s shares continue to lead the selloff - they’re currently down almost 7%
Hotel group Accor is also suffering, now down 5.2%, on predictions that tourism will suffer from the Paris attacks.
Luxury group LVMH Moët Hennessy Louis Vuitton is next, down 1.8%, followed by the major French banks - who might all be hit if economic confidence falls.
CNBC is doing a fine job finding billionaires who aren’t panicking over France.
Wilbur Ross, whose investment firm is a big player in Europe, told the TV station that he doesn’t expect markets to suffer heavy falls, saying:
“I don’ t think this will provoke anything like a 10 percent market crack”.
CNCB has now published Warren Buffett’s comments about France:
Billionaire Warren Buffett said Monday the terrorist attacks in Paris won’t change his investment decisions.
“I’m not selling any securities because of the attacks in Paris, not at all,” he said in a phone interview with CNBC.
As for questions about whether the attacks would delay what many expect to be a Federal Reserve interest rate hike next month, Buffett said: “We never do anything based on what we think the Fed or the market is going to do in the next six months.”
Around two centuries ago, Nathan Rothschild apparently remarked that investors should buy on the sound of cannons, and sell when the victory trumpets are sounded.
And unsentimental investors remember his advice today, buying into defence stocks today on anticipation of more military action in Syria.
In the City, Rolls Royce shares are up 1.5% and BAE Systems have gained 2.2%. And French arms maker Thales has risen almost 2%.
Updated
Buffett: I'm not selling because of Paris
Warren Buffett, the world’s third-richest man, says the attacks in France won’t affect his investments:
Berkshire's Buffett to CNBC: "I'm not selling any securities because of the attacks in Paris - not at all."
— CNBC Now (@CNBCnow) November 16, 2015
For decades, Buffett’s investment strategy has been to buy solid companies with long-term prospects, and hold them.
His Berkshire Hathaway group owns stakes in scores of the world’s largest companies, including American Express, General Electric, Kraft Heinz and Coca-Cola.
Updated
The euro has shed around 0.5% against the US dollar this morning, falling close to its lowest level since April.
#Euro nears six-month low as #ParisAttacks stoke economic concern https://t.co/Roft5hX31T via @worrachate pic.twitter.com/oalPvKyXkz
— Zoe Schneeweiss (@ZSchneeweiss) November 16, 2015
That’s partly due to investors moving to ‘safe-haven’ currencies such as the US dollar and Japanese yen.
It’s also because eurozone monetary policy may be eased soon, to stimulate the eurozone economy. Vitor Constâncio’s concerns this morning suggest the ECB is likely to act, if conditions deteriorate.
Here’s what’s up and down across the European markets today:
Stock markets eke out gains in Europe as oil and precious metals rise https://t.co/AUzuFIshoi via @business pic.twitter.com/TxpMSeOxm0
— Paul Dobson (@paul_dobson) November 16, 2015
Joshua Mahony, market analyst at IG, agrees that economic confidence could be hit:
While the total human impact is immeasurable, the economic shockwaves to the French economy could include reduced investment, consumer spending and confidence for an economy that is already under pressure.
ECB vice-president warns of fallout from Paris attacks
The vice-president of the European Central Bank has warned that Friday night’s terror attacks could hit investor confidence in Europe.
Speaking at a conference Frankfurt, Vitor Constâncio condemned the “terrible events” in Paris, and cautioned that:
“It can compound all the problems that we were already facing.
Markets are currently “taking it calmly” so far, Constâncio pointed out. But it’s too early to know the economic cost of the attacks.
He says:
“Forthcoming events ... will impact confidence and possible risk aversion.
(thanks to Reuters for the quotes)
‘Too early to assess economic impact of Paris attacks’ – ECB’s Constancio https://t.co/fyjqoZrYBh #forex, #forextrading
— John Hall (@ForExtraReview) November 16, 2015
The eurozone economy remains quite fragile. Growth rate slipped to just 0.3% in the last quarter, which is slower than the UK (+0.5%).
Inflation is just 0.1%, according to data released earlier today - which is why the ECB is expected to boost its bond-buying stimulus programme soon.
Updated
City analyst Ipek Ozkardeskaya, of London Capital Markets, explains why hotel and airline stock have fallen today:
Rising terrorist threats will certainly impact tourist arrivals to big European cities as Paris, London and Berlin before the festive Christmas period.
On the other hand, the rising geopolitical tensions between the West and the IS, the reinforcement of security measures in big European cities and the air strikes in Syria are expected to boost government spending on police and military and could give a bump to short-term domestic demand, she adds.
More here:
#Paris Attacks mark the European session, Japanese economy contracts https://t.co/qc0D2ZDK8T
— Ipek Ozkardeskaya (@IpekOzkardeskay) November 16, 2015
Updated
Leisure analyst Mark Brumby tweets that French consumer spending is likely to dip:
Terrorism + leisure travel. Great shame to have to say again that the two don’t mix. Plans, even if only at the margin, will be changed
— Mark Brumby (@brumbymark) November 16, 2015
Overall leisure spending. People spend less when glued to the TV. Could be 9-11 or a General Election but spending will be depressed
— Mark Brumby (@brumbymark) November 16, 2015
The oil price has jumped around 1% this morning, helping to drive up shares in energy companies.
This comes after United States warplanes attacked trucks used by ISIS to smuggle crude oil out of Syria, and France bombed ISIS’s stronghold in Raqqa.
Oil is usually a barometer of geopolitical tensions, especially anything that could disrupt supplies from the Middle East.
There’s general relief that markets are defying expectations and shrugging off the terror threat:
Mike van Dulken, head of research at Accendo Markets, sums up the mood:
“Equity markets positive this morning, showing solidarity and resilience in the face of adversity with the Parisian bourse the standout performer in a message of unity to those who terrorized it this weekend.”
Investors had been braced for a volatile trading day - but in the event, there’s less drama than feared (so far).
Stoxx 600 has turned around 90 minutes into trade, now up 0.2%, travel, airline and luxury stocks still mostly lower though @CNBCWEX
— Carolin Roth (@CarolinCNBC) November 16, 2015
French hotel group @Accorhotels leads falling stocks this morning with 8% decline. Also down: airlines, luxury stocks. #ParisAttacks
— John Sinclair Foley (@johnsfoley) November 16, 2015
Virtually every European travel stock is down today, with Air France leading the selloff:
French market reverses early losses
Here’s resilience for you – the French CAC 40 just shrugged off all its early selloff, and is now slightly higher.
Travel stocks are still being hit, with Air France now down 6% and Eurotunnel losing 4%.
But other shares are picking up across Europe.
Analyst at French bank BNP Paribas report that “markets have opened generally cautiously after the tragic events in Paris”.
Kit Juckes, chief currency strategist at French bank Société Générale, is hopeful that the country’s economy will not be badly hit by Friday’s attack:
He writes:
I am struck that the reaction to such atrocities has changed a lot since the attacks on New York, Washington DC, and the skies above America in September 2001. Then, we stood and stared, in shock. The US and the global economy were slowing before the World Trade Centre towers collapsed and the emotional reaction made sure the outcome was severe. But we’ve moved on. More appalled than shocked.
Simon Kuper, the FT journalist who lives in the 11e arrondissement near the Bataclan concert venue that was the epicentre of the tragedy, wrote that his 9-year-old daughter is calm because “We’re used to this now”.
Children have a knack of getting straight to the point. Paris clearly lost a weekend of shopping and the retail sales figures will reflect that, but I’d guess the effect will be temporary. The underground heading into the centre of London was packed when I headed out for dinner on Saturday and my impression is that while the outpouring of solidarity for Parisians is heartfelt, it won’t get in the way of life. The same, I think (and hope) is true of Paris. Nothing will be quite the same, but Paris will still be beautiful and its people resilient.
Updated
It does appear that Europe will avoid a major selloff this morning.
Connor Campbell of City firm SpreadEx reports:
In a sign of resilience there is no sign of the panicked trading that could have been justifiably expected from the European indices.
Not that share prices are important at a time like this, of course. But still, a muted response suggests that investors are broadly holding their nerve.
Updated
Hotel group Accor dropped by 7% at the open.
Luxury groups Hermes, LVMH and Kering, which get a large part of their sales from foreign tourists in Paris, were both down about 3%, Reuters points out.
Airline stocks drop
Travel stocks are bearing the brunt of this morning’s selloff, reflecting concerns that European tourism will be hit by fears over terrorism.
Air France’s shares dropped 5% in early trading, while Eurotunnel is down over 3%.
British Airways’s parent company IAG is the biggest faller in London, down 4%.
And other areas of the tourism sector are also seeing a reaction - with Intercontinental Hotels down 2.3%.
Paris stock market falls 1.1%
Trading is underway at the French stock market, and shares are falling - but it’s not a major rout.
The CAC 40, made up of France’s biggest blue-chip companies, has lost 1.1% at the open, as investors in Paris are get their first opportunity to react to Friday night’s attacks.
That’s a slightly more muted reaction than feared over the weekend.
Other European markets are down too, with Germany’s DAX shedding 0.9%.
Jameel Ahmad, chief market analyst at FXTM, says the Paris attacks are adding to worries over the global economy;
Following the tragic events in France on Friday evening and after losses were noticed throughout the Asian markets overnight, expectations are high that the global markets are going to remain under pressure as trading for the week gets under way.
The tragic events in France are likely to weigh on investor sentiment and will probably encourage some risk aversion from investors. Investor sentiment towards global markets was already looking shaky as last week concluded, and the recent events are going to weigh further on this.
Updated
French government bonds are rising in value this morning - probably a sign that investors are a little more nervous.
This has pushed down the interest rate, or yield, on French debt (yields fall when prices rise)
#France's bonds advance as country bombs Islamic State targets. 10yr yields drop to 0.87%. https://t.co/aH0GRo7RdD pic.twitter.com/1voEqDbcX9
— Holger Zschaepitz (@Schuldensuehner) November 16, 2015
The euro has weakened a little overnight (down 0.25%), reflecting concerns that Europe’s already-fragile recovery is going to be knocked back.
The gold price has gained 1%, though, to $1,095 per ounce:
Risk off, gold up following Paris attacks. pic.twitter.com/pV3wQUdytT
— Eddie van der Walt (@EdVanDerWalt) November 16, 2015
Updated
The agenda: European markets reopen after France attacks
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
European markets are expected to fall today, following Friday night’s terror attacks in Paris. But it doesn’t look like we’ll see a major crash.
The French market is, understandably, set to lead the sell-off, with concern that the country’s tourism industry will suffer following Europe’s worst terrorist attack in a decade.
Paris’s stock market, Euronext Paris, will open today - with tighter security. The CAC 40 index was originally predicted to plunge by around 4%.
Update on European opening - FTSE -45, DAX -125 CAC -111 (IG) at 7.30am
— David Buik (@truemagic68) November 16, 2015
But the latest signs are that the CAC might only lose 1%, with traders refusing to be panicked.
Shares have already fallen across much of Asia. Angus Nicholson of IG sums up the situation from Australia.
After the terrible tragedy seen in Paris on Friday evening (and also the bombing in Beirut), markets have seen some of these fears play out in the financial world. There was noticeable buying in gold and safe-haven currencies such as the US dollar and Japanese yen. Oil also saw a bit of an increase off its two-and-a-half month lows from concern about what the Western response may mean for Middle Eastern oil production.
Many markets opened down in Asia on the news, and futures were pointing down for European and American markets, although we did see this pull back somewhat as trade progressed throughout the day. All indications are that these negative moves would only be temporary and are likely to dissipate over the coming days.
Money is already moving out of shares, and into safer assets such as German bunds.
European equity futures -1.2% and Bunds have gapped higher at the open
— RANsquawk (@RANsquawk) November 16, 2015
However, GS note that the attacks are likely to have a short-lived negative market impact
— RANsquawk (@RANsquawk) November 16, 2015
(GS = Goldman Sachs).
Concerns over the global economy are also on the rise; overnight, Japan has slipped back into recession after shrinking by 0.2% in the last quarter:
GDP in Japan fell 0.2% or 0.8% in annualised times as it returns to recession and has a quadruple dip #Abenomics #QQE #BankofJapan
— Shaun Richards (@notayesmansecon) November 16, 2015
And European Central bank chief Mario Draghi is due to speak in Madrid this morning. He may touch on Europe’s fragile recovery, after last Friday’s GDP figures showed that growth slowed in the last quarter.
We’ll be tracking all the main events through the day....
Updated
