Terrorism Blasts Marts, G8 But London Attacks Bring Little Uncertainty
July 11, 2005
Thursday morning's series of blasts targeting public transportation during London's rush hour has set the world at high alert for terrorism and had an immediate impact on markets, but the long-term effect is likely to be negligible, some experts say.
Although exchanges have beefed up security in the wake of the attacks, even the London Stock Exchange did not post a statement about trading or the attacks themselves, and the mood on Wall Street at press time was business as usual.
Mutual fund companies have similarly remained silent on the subject, suggesting that American investors have no acute need for reassurance.
With double-digit fatalities and injuries into the hundreds, the attacks were reportedly instigated by al-Qaeda and timed to coincide with the G8 Summit in Scotland. Early market reaction to the news was negative, especially in London, where the FTSE Share Index was down 111.9 points, over 2%, within hours of the attacks.
Following a later opening, the Dow Jones Industrial Average went down 59 points and Dow Futures at one point was down 250 points.
Oil prices, which had topped a record-breaking $62 per barrel, traded below $60 following news of the attacks. However, the market response to terrorism is much less pronounced than it had been following the Sept. 11 attacks on the World Trade Center and Pentagon.
"We seem to be getting more efficient at handling these events," said Robert Nunn, who holds a seat on the New York Stock Exchange with Cohen Specialists, told CNBC. He also pointed out that the London attacks were most likely a one-time occurrence.
Even in London, investors did not engage in a fire sale of equities, said Richard Hunter, head of U.K. equities at Hargreaves Lansdown, a London brokerage.
In the short-term, investors are less panicked about acts of terrorism, perhaps because they also realize that such events have little long-term effect.
"Over time, these events are meaningless in terms of the financial markets," said Steve Massocca, co-chief executive officer of Pacific Growth Equities. "There will be no impact on where we'll be in two to three months from now."
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