Markets Weather Terror Attacks

Markets Weather Terror Attacks

After Friday’s shocking terrorist attacks in Paris, the sentiment in the financial markets has been cautious, though stock markets have held up fairly well.



Markets Weather Terror Attacks
Markets Weather Terror Attacks

European stock indices were mixed, with certain sectors noticeably affected, such as airlines and travel and leisure stocks, but the overall market was not as volatile as might have been feared. The German DAX slid 0.16% and the French CAC 40 fell 0.50%, but the UK’s FTSE 100 rose 0.23% to 6132. 

France launched air strikes against Islamic State targets in Syria on Sunday, and concerns over increased military activity in the Middle East and the potential for impact on oil supplies from the region served to push oil prices higher in early trading. The global glut of crude oil though is a fundamental drag, with stockpiles near record levels, and oil prices dropped again as the session continued. US crude oil futures slid into negative territory and are approaching the $40 mark, the December contract down 0.3% at $40.58 a barrel at the time of writing. 

Many measures of US manufacturing were negative for October, though we are still waiting on the hard data which is released tomorrow with the Fed’s industrial production report, and the first anecdotal evidence for November has also proven to be a disappointment. The Empire State Manufacturing survey improved slightly from October’s -11.36 reading, but was still deeply in contractionary levels at -10.74 and well below the consensus estimate of -5. Employment is softening, new orders are contracting (though at a slower pace than in the previous month) and the unfilled orders component sunk to its lowest level of the year at -18.18. The manufacturing sector has been hit by the strength of the dollar and the trend appears to be continuing, which could prove to be an issue for the Fed as it looks to tighten monetary policy. 

Despite this disappointing read on manufacturing in the New York area, and the anxiety caused by the terror attacks, the US stock market opened little changed, the Dow Jones opening down slightly, while the S&P 500 Index managed to advance after a solid opening, rising 0.35% to 2030.1 in early trading. 

 

In the forex market, the US dollar advanced against its Canadian counterpart after a report showed an unexpected decline in Canadian manufacturing sales for September. Sales fell 1.5%, versus an expected 0.5% gain, following a 0.6% decline in August, and reflected continued difficulties for the petroleum and coal industries and a big drop for auto assemblers. USD/CAD rose 0.24% to 1.3353. 


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