European markets defiant with France’s Cac recovering after early falls

Powered by Guardian.co.ukThis article titled “European markets defiant with France’s Cac recovering after early falls” was written by Nick Fletcher, for theguardian.com on Monday 16th November 2015 09.57 UTC

After initial falls in the wake of Friday’s terror attacks in Paris, stock markets are proving more resilient than expected and have moved back into positive territory.

France’s Cac is up 0.23% at 4819 having dropped more than 1% as low as 4751, while Germany’s Dax has edged up 0.11% after a similar early decline. Asian markets ended lower, with the Nikkei 225 down 1% and the Hang Seng 1.7% lower.

In the UK, the FTSE 100 has added 0.33% or 20.20 points to 6138.48. Analysts at IG Index said: “The markets are off their lows as traders buy into the dips.”

David Morrison at SpreadCo said: “Early expectations had been for a more significant mark-down with many out-of-hours market makers anticipating a fall of 2-3% on the open. This was understandable as the outrage in France followed a bad week for global stock markets amid concerns over the likely negative effect of tighter monetary policy in the US. But while gold, silver and the dollar have firmed modestly on safe-haven positioning, European stock indices, including the French CAC, are now positive for the day. Investors have shrugged off any worries that the attack and its repercussions will crimp the behaviour and lifestyles of those in the West and beyond.”

There were also suggestions that the European Central Bank, which had already hinted at further stimulus measures in December to boost the flagging eurozone economy, was now certain to act to try and prevent a new consumer downturn in the wake of the attacks.

In comparison, on the day of the 9/11attacks on the US, the FTSE 100 fell 5.72%, while there were three days in November 2008 at the start of the global financial crisis when the UK index lost 7.8%, 8.8% and 7.1%.

However despite the recovery from early falls today, holiday companies continue to bear the brunt of the selling, with concerns about the effect of the terror attacks on consumers’ travel and leisure plans. Tighter border controls and increased security could also have an effect. In Paris, Air France KLM is down 6%, French hotel group Accor is 5% lower and Eurotunnel has lost 4%.

In the UK, travel company Tui is leading the FTSE 100 fallers, down 46p or 4% to £10.88, while British Airways owner International Airlines Group has lost 14p or 2% to 578.5p.

InterContinental Hotels is down 54p or 2% to £24.55 while cruise company Carnival has slipped 75p or 2% to £33.96.

But as investors seek havens amid the uncertainty, gold and silver are both higher on the day. So Randgold Resources has risen 17.5p to 531p while Fresnillo is up 8p at 681p.

Energy companies are also providing some support for the market, as oil moved higher on concerns about supply issues in the light of the continuing violence in the Middle East. Brent crude is up 0.8% at $44.84 a barrel. Royal Dutch Shell A shares are up 29p at £15.97.

guardian.co.uk © Guardian News & Media Limited 2010

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