This article titled “French stock market resilient as Buffett rules out selling shares – live updates” was written by Graeme Wearden (until 2.30) and Nick Fletcher, for theguardian.com on Monday 16th November 2015 14.45 UTC
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:
€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.
Gregoire Laverne, fund manager at Roche Brune Asset Management, tells Reuters:
“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.”
Updated at 2.27pm GMT
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 at 1.14pm GMT
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:
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 at 12.49pm GMT
The euro has shed around 0.5% against the US dollar this morning, falling close to its lowest level since April.
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:
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.
“Forthcoming events … will impact confidence and possible risk aversion.
(thanks to Reuters for the quotes)
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 at 11.23am GMT
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.
Updated at 11.20am GMT
Leisure analyst Mark Brumby tweets that French consumer spending is likely to dip:
The oil price has jumped around 1% this morning, helping to drive up shares in energy companies.
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).
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:
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 at 9.24am GMT
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 at 9.21am GMT
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 at 8.08am GMT
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)
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:
Updated at 7.56am GMT
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%.
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.
(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:
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 at 8.53am GMT
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