SEC chairman expects markets to reopen Thursday

U.S. Securities and Exchange Commission Chairman Harvey Pitt said today he expected U.S. financial markets to open on Thursday.

"It is our hope and expectation that the markets will resume operation tomorrow or as soon as tomorrow but I believe it will be tomorrow," Pitt, whose agency regulates the U.S. stock markets, said on CBS’s Early Show.

The New York Stock Exchange, American Stock Exchange and Nasdaq Stock Market were expected to decide later in the day whether to reopen Thursday.

Analysts were hesitant to predict the effect the suicide attacks in New York and Washington would have on stocks when trading resumes, but agreed it will only add to the market’s already deep-seated uncertainty.

Asian shares plunged today on fears the terrorist attacks in the United States could deal a severe blow to the ailing U.S. and Japanese economies.

Japan's 225-issue Nikkei Stock Average plunged beneath the key 10,000-point mark for the first time in 17 years as traders dumped shares. The Nikkei closed down 682.85 points, or 6.63 percent, at 9,610.10.

European indexes recouped some of Tuesday’s steep losses. The FTSE 100 index of leading British shares gained 2.79 percent, or 136.10, to close today at 4,882.10. It had been 94.2 points below Tuesday’s closing level at one point.

Drug and other safe-haven stocks offset falling oil and airline stocks. Pharmaceutical giant Glaxo soared 10.7 percent and the DJ Stoxx healthcare index shot up 6.7 percent.

Germany’s Deutsche Boerse and the Paris Stock Exchange followed similar trends. The Xetra DAX index of German blue chips was up 1.23 percent at 4,882.10, while the Paris CAC 40 was up 1.34 percent to 4,114.26.

The dollar stabilized against other major currencies, while gold prices retreated.

U.S. shares not trading abroad

European exchanges suspended trading in U.S. shares in Europe today, with many exchanges holding a minute of silence to mark their respect for the dead in New York.

"It’s too early to work out a strategy," said Morley Fund Management portfolio manager Jeff Currington."Until it’s clear what the U.S. government is going to do, militarily and diplomatically, it’s difficult to have any clear view of longer-term consequences. It’s not sensible to do that much in terms of buying and selling."

Investors worried the attacks on America would tip an already fragile U.S. economy into recession by hurting consumer confidence. Goldman Sachs said Europe’s slowdown would deepen, but the European Central Bank’s head Wim Duisenberg said there would be no recession in Europe.

European shares tumbled about 4 percent on Tuesday to late 1998 lows after the airplane attacks in New York and Washington which destroyed the landmark World Trade Center twin towers and hit the Pentagon.

As benchmark equity indices yo-yoed, investors and brokers limited their trades to essentials.

Market players said that without liquidity, with no guidance from Wall Street and with deep uncertainty over ramifications of the devastating events in the U.S., markets were unlikely to return to normality for several days at the very least.

Insurance stocks hit

Worries about liabilities following the U.S. attacks hit European insurers for the second day. Credit rating agency Moody’s said it estimated the total insurance bill from the U.S. attacks at $10 billion to $15 billion.

The world’s largest reinsurer, Munich Re, said it faced liabilities of up to one billion euros from the U.S. attacks which would "severely hurt" its 2001 profit outlook.

Munich was one of the first to give an estimate of its likely costs, and after its statement, the German firm’s shares pared their losses and turned 5.6 percent higher.

French group AXA which has large exposure to the United States, fell 5.4 percent. Zurich Financial shed 5.3 percent, while Dutch Aegon eased 1.5 percent.

The consumer cyclical index slumped 3 percent, on top of Tuesday’s steep losses, with airlines heavily sold after the U.S. grounded all air traffic at least until midday on Wednesday and disruption spread to European carriers. Air France shed 10.5 percent.

Energy stocks, the lone gainers on Tuesday, fell 4.4 percent, with Shell and BP each down about five percent.

Deutsche Bank estimated the suspension of U.S. commercial air traffic would cut U.S. oil demand by about 1.8 million barrels a day.

Flight to safety

At least two investment banks raised their ratings on the pharmaceuticals sector, seen as a defensive safe haven in case of a global recession. Glaxo led the sector, while AstraZeneca rose 8 percent and Novartis seven percent.

Among other gainers, shares in security companies raced ahead as investors bet the firms would benefit from stricter security measures following the U.S. attacks. Sweden’s Securitas gained 14 percent, while Denmark’s Group 4 Falck firmed 3 percent.

Technology and telecommunications shares also rose, two sectors that Goldman Sachs said would benefit from the U.S. air attacks.

U.S. SEC Chairman Pitt said he did not think the U.S. market close would have a significant impact on global markets.

"We’ve been in touch not only with domestic markets but world markets and they have been prepared for this," Pitt said. "Our markets are incredibly resilient. I’ve spent a lot of time on the phone with the major market centers ... There’s obviously an emotional component to this and that’s very understandable, but I think people understand that we have the strongest and deepest markets in the world.’’

The last time the New York Stock Exchange was closed for two consecutive days was in honour of the end of World War II in August, 1945.