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French financial markets wary of terror attack aftershock

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November 16
9:28 PM 2015

Analysts are expecting some sell-off in the stock market today as investors are expected to be cautious after the Paris attack. However, the market seems to be resilient from the attack especially the French market as investors seem to refuse to panic despite the attack.

According to The Guardian, French market did open lower today but most stocks slowly rebound after entering few hours of trading. Although not all stocks are performing well, especially the airline and luxury goods shares.

This particularly due to slight worries among investors that there might be another attack using the airplane similar like the 9/11 attack in the United States.

The sell-off are considered as analysts as a knee-jerk reaction by investors as they are selling any risky assets just to measure and re-assess the situation before entering the market again.

According to an analyst from the S&P Capital IQ, Sam Stovall, any losses faced by the French market will be fixed by Wall Street as the investors there will always try their best not to let any acts of terror to dampen both domestic and global market.

According to a data cited by USA Today, the overall median one-day loss for S&P 500 due to an act of terror was only 2.1 percent. While the total median loss due to all acts of terror that ever happen in the US and outside the US was only 6.2 percent and it normally takes around 13 days for the market to recover back.

Stovall also added that "It may add some velocity to the current slide in global equity prices. Investors are already worried about the Fed raising rates and possibly tipping the U.S. into a recession. Now you can add a negative reaction to the terrorist actions in Paris."

He also added that "Because I don't see these terrorist actions adding to weakness in the global economy, the share price will likely be short-lived."

BBC on the other hand reported that some sector might slowly be affected in the coming days including shares that are related with tourism.

Since tourism account to 7.5 percent of French GDP, as one analyst from SMBC Nikko Securities, Hidenori Suezawa told reporters that "France has a big tourism industry..there may be some damage to the economy if this leads to a fall in visitors to France, or in tourism in general after the crash of a Russian plane."

Although the tourism and airlines sector was seen as potentially be affected by the situation, most analysts are still optimistic regarding the situation. Most analysts predicted the situation to be short-lived and French market will continue an upward momentum.

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