Panic Subsides in Foreign Markets
Foreign stock markets mostly stabilized Thursday, as the panic in the wake of Tuesday’s terrorist attacks continued to subside.
But analysts noted that trading volumes were thin in most markets, as many foreign investors waited to take their next cue from U.S. stock markets, which are expected to reopen Monday.
In foreign currency trading, the dollar lost ground against the euro and yen, but trading also was quiet in that market.
Most key Asian markets closed modestly higher or little changed Thursday after plunging Wednesday. Japan’s Nikkei-225 index inched up 2.99 points, or 0.03%, to 9,613.09, after losing 6.6% Wednesday. South Korea’s index gained 5% after falling 12% Wednesday.
Early today in Asia the Nikkei was up 1.3%, while the South Korean index was down 4.2%. Hong Kong’s market was down 0.8%.
In Europe on Thursday, most major markets ended modestly higher for a second straight day. Traders said the mood was helped by the European Central Bank’s moves to inject liquidity into the banking system--even though ECB policymakers met and decided against cutting their key short-term interest rate, now 4.25%.
Britain’s FTSE-100 index rose 1.3% after gaining 2.9% on Wednesday. The index dropped 5.7% on Tuesday. The German market rose 1.3% Thursday after adding 1.4% on Wednesday. It had plunged 8.5% on Tuesday.
Insurance stocks rebounded in European markets from their losses in the wake of the U.S. attacks. Better information about the potential liability from Tuesday’s attacks made traders rethink earlier doomsday assumptions.
In Latin America, the Mexican market remained closed Thursday, but other markets were open.
Brazilian stocks were hit hard, with the Bovespa index sliding 7.3% to a two-year low. Brazil’s currency, the real, plunged to a record low against the dollar before the country’s central bank stepped in to prop it up.
Argentine, Chilean and Venezuelan shares also slid as investors cashed out of stocks, some buying U.S. Treasuries instead as U.S. bond trading resumed.
“This is a ‘get me out of here’ reaction,” said Ken Colli, economist at Credit Lyonnais. “It’s a flight to quality, and it may take a few weeks for things to settle down.”
Canadian stocks resumed trading and closed with gains overall, with the key index up 0.8%.
In global currency trading, the dollar weakened after rising Wednesday. The euro was quoted at 91.1 cents, up from 90.66 cents Wednesday. The dollar also fell against the yen, to 118.91 yen from 119.51 on Wednesday.
A weak U.S. consumer-confidence report dimmed the appetite for the dollar, analysts said. “The dominating view is now we’ve had this shock to the system it will probably cause consumer demand to tail off,” damaging prospects for the U.S. economy and the dollar, said Thomas Benfer, a director of currency sales at Bank of Montreal.
Gold, a traditional safe haven in times of crisis, was quoted in London at $281 a troy ounce Thursday, up from Wednesday’s close of $278.50 but down from $290 on Tuesday after the attacks.
Bloomberg News and Reuters were used in compiling this report.
