World Markets Slide in Post-Attack Jitters
Most stock markets around the world fell Friday in what some analysts fear could be a grim preview of the scheduled reopening of U.S. markets Monday.
Many European markets slid to near-three-year lows as investors fled to traditional safe havens--bidding up prices of precious metals, oil and U.S. Treasuries. Analysts blamed fears of escalating violence in the aftermath of Tuesday’s terrorist attacks in New York and Washington.
One bulwark of stability in recent years, the U.S. dollar, dropped to six-month lows against the European currency and the Japanese yen on fears the U.S. economy will become mired in recession.
“Clearly, foreign investors are freaking out, and that shows up in the dollar breaking down,” said Peter McTeague, Treasury market strategist at Greenwich Capital Markets.
Jitters increased after the militant Islamic Taliban government in Afghanistan vowed to seek revenge if the United States attacked the country, which is believed to shelter dissident Osama bin Laden, suspected to be the instigator of the attacks.
The New York Stock Exchange, the Nasdaq Stock Market and the American Stock Exchange have assured investors they would reopen Monday after a four-day hiatus if equipment tests over the weekend are successful.
Analysts say the shutdown has prevented a wave of panic selling that could have sent the stock market to a sickening plunge Tuesday. A handful of Wall Street gurus have even predicted higher stock prices on the opening, with investors possibly staging a patriotic rally, but most still are expecting a drop, especially after Friday’s sell-off in Europe.
“It tells them that if this is a sign of the psychology that’s affecting investors, there is no reason to think it’s going to be different on either side of the border or the ocean,” said Milton Ezrati, a senior economist and strategist at Lord Abbott & Co.
Most international markets had recovered after a sharp sell-off immediately after Tuesday’s attacks. But those mild gains were completely wiped out Friday.
The Pan-European FTSE Eurotop 300 index dropped 5.2%, and the DJ Euro Stoxx 50 sank 6.2%.
In London, the FTSE-100 index tumbled 3.8%, while the German DAX index lost 6.3% and the CAC-40 index in Paris fell 5.0%.
Some Asian markets headed south as well, with the Taiwan market falling 4.5% and the South Korean composite index off 3.4%. Japanese stocks, which fell to fresh 17-year lows earlier this week, bucked the trend, jumping 4.1% as banks racked up gains after media reports raised hopes of speedier bad-loan disposals by Japanese banks.
Canada’s stock market, the first North American stock market to open its doors after the tragedy, rose in the first day of trading Thursday. But the Toronto market sank 3.0% on Friday, with every sector falling except gold shares.
Latin American markets were mixed, with Argentine stocks showing modest gains, while indexes in Chile and Brazil were down. Mexico’s stock market was closed.
The U.S. dollar fell to six-month lows against the euro in early U.S. trading but steadied around 92 cents, down a full percentage point from the previous close.
The greenback also hit six-month lows under 117 yen Friday and closed around 117.35 yen in midday trading, down more than 1.3% on the day.
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How Foreign Stock Markets Fared
Here is a look at the gains or losses in key foreign stock indexes Tuesday, Wednesday, Thursday and Friday. Note that Asian markets had closed Tuesday before the terrorist attacks on the United States occurred.
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Percentage change: Latest Country/index Tues. Wed. Thurs. Fri. close Japan/Nikkei-225 +1.0% -6.6% * +4.1% 10,008.89 Hong Kong/ Hang Seng +0.5 -8.9 +0.8% +0.9 9,655.45 Brazil/Bovespa -9.2 +2.6 -7.3 -2.6 10,034.40 Canada/TSE-300 -4.0 closed +0.8 -3.0 6,890.85 S. Korea/composite -1.8 -12.0 +5.0 -3.4 482.29 Britain/FTSE-100 -5.7 +2.9 +1.3 -3.8 4,755.70 Taiwan/weighted -2.6 closed -5.4 -4.5 3,774.62 France/CAC-40 -4.6 +0.1 * -5.8 6,911.80 Germany/DAX -8.5 +1.4 +1.3 -6.3 4,115.98 Italy/MIB-30 -7.8 +0.9 +1.3 -6.7 27,757.00 Mexico/IPC -5.6 closed closed closed 5,531.02
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* These markets closed with minuscule net percentage gains or losses Thursday.
Source: Bloomberg News
