US, European markets bounce back after black Thursday |
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Published
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Fri, 08 Jul 2005 09:35
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LONDON: Stock markets in the U.S. and Europe made swift recoveries following a near crash Thursday in the wake of the serial blasts in London.
The Dow Jones index rose to close up 0.31 per cent, while the U.K's FTSE 100 index reduced its slide from an earlier 3 per cent to 1.36 per cent at 5,158 at close. Markets in France, Germany, Holland and Spain too returned to near normal.
The pound initially hit a 19-month low against the U.S. dollar ($1.7403) as investors switched to Swiss franc and gold. However, it recovered swiftly towards the evening ($1.7415).
Gold price in London went up from $423.6 bid per troy ounce to $425.60 bid per troy ounce, while in Zurich the bid price was $426.08, up from $423.50.
The blasts had impact on oil prices too. The price dropped by $4 a barrel, but recovered in afternoon trading.
The London Stock Exchange remained opened for business, but advised traders to switch off certain electronic trading systems to prevent a volatile response to the blasts.
Dealers reported there was no real panic selling in spite of the visible disruption and damage caused by the explosions.
There were a total of 344,601 British equity trades on Thursday, topping a previous record of 310,843 set in March and the exchange imposed "Fast Market" rules, for the first time since the market crash of 1987.
Stocks in insurance, transport and leisure business were the most affected. British Airways fell 4.2 per cent, travel group First Choice 2.8 percent, cruise operator Carnival 2.2 per cent and hotels group Hilton 3.3 per cent.
In the insurance sector, Prudential fell 1.9 percent, Royal & Sun Alliance 2.9 and building group Hammerson 2.1.
In the U.S., homeland security secretary Michael Chertoff assured the nation and said there is no credible evidence of a similar attack in the U.S. This evidently reassured the markets.
In an unrelated development, the Bank of England decided to retain the interest rates at 4.75 percent. The European Central Bank too made no change in its interest rates which is 2 percent. ECB president Jean-Claude Trichet talked to his counterparts in the U.S. and U.K., Alan Greenspan and Mervyn King.
Following the blasts, the London Clearing House was evacuated and the operations were conducted from a disaster recovery site, while the London Metal Exchange cancelled its dealing.
The blastwaves were felt even in South Africa, where share prices dropped nearly 3 percent initially and improving later to a loss of 0.6 percent.
British economists say the psychological shock of the blasts could affect consumer confidence in the country, which can add to the existing slowdown in consumer spending.
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