by The November 13 terrorist attacks in Paris claimed 129 lives and are changing the political climate in France and Europe. One thing they haven’t done, however, is roil financial markets. Both the Stoxx 50, Europe’s blue-chip index, and France’s benchmark CAC 40 index were up 2.1 percent in the first three days of trading after the attacks. Certain sectors – airlines, hotels, luxury goods, and financial stocks – took a hit on the Monday after the attacks. Even within these sectors, however, individual stocks such as luxury brands LVMH and Kering rallied as early as Tuesday. Travel-related stocks such as Air France-KLM and Aeroports de Paris, the company that manages the 14 airports in and around Paris, were still down slightly on Wednesday. Foreign exchange markets remained relatively sanguine as well. The euro depreciated slightly against the dollar in the three days after the attacks, moving from €1.077 to €1.066. That might have happened without the attacks, however, as investors are bracing for the Federal Reserve to hike interest rates in December. Credit Suisse expects the euro to continue weakening against the dollar in the coming weeks. The incident has the potential to shift French public sentiment to the right.
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Ashley Kindergan considers the following as important: attacks, Credit Suisse, France, Francois Hollande, National Front, World Affairs: Features
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The November 13 terrorist attacks in Paris claimed 129 lives and are changing the political climate in France and Europe. One thing they haven’t done, however, is roil financial markets. Both the Stoxx 50, Europe’s blue-chip index, and France’s benchmark CAC 40 index were up 2.1 percent in the first three days of trading after the attacks.
Certain sectors – airlines, hotels, luxury goods, and financial stocks – took a hit on the Monday after the attacks. Even within these sectors, however, individual stocks such as luxury brands LVMH and Kering rallied as early as Tuesday. Travel-related stocks such as Air France-KLM and Aeroports de Paris, the company that manages the 14 airports in and around Paris, were still down slightly on Wednesday.
Foreign exchange markets remained relatively sanguine as well. The euro depreciated slightly against the dollar in the three days after the attacks, moving from €1.077 to €1.066. That might have happened without the attacks, however, as investors are bracing for the Federal Reserve to hike interest rates in December. Credit Suisse expects the euro to continue weakening against the dollar in the coming weeks.
The incident has the potential to shift French public sentiment to the right. Credit Suisse’s analysts say it’s possible the anti-immigrant, anti-euro National Front party could perform better than expected in regional elections December 6. Even before the attacks, Hollande’s Socialist government earned low marks from the public due to the relative weakness of the French economy. One October poll put Hollande’s approval rating at 20 percent. The next presidential election isn’t until 2017, however, making it impossible to predict whether the attacks might eventually help shift the balance of power in the country.
The geopolitical situation the attacks forced into the spotlight won’t be resolved anytime soon, and the risk of further terrorist incidents hasn’t disappeared. But what happened in Paris didn’t crush financial markets, and if previous terrorist incidents in London and Madrid are any indication, it won’t likely have long-lasting economic effects.