How Paris Bombings Are Affecting The Financial Markets

• U.S. equity markets are stable in early Monday trading following the Paris attacks.
• It appears there will be no market panic similar to the post-9/11 selloff.
• Asian stocks are falling following disappointing economic numbers from Japan.

After weekend concerns over the way U.S. markets would react to the terrorist attacks in Paris, early trading on Monday morning indicates that markets are relatively stable. Both the S&P 500 and the Dow Jones Industrial Average opened the week slightly higher.

Markets Remain Stable

Not only are U.S. equity markets stable, there also appears to be very little “flight to safety” trading on Monday morning. The SPDR Gold Trust (ETF) GLD is up less than 1 percent, the United States Oil Fund LP (ETF) USO is down 1.3 percent and the iShares Barclays 20+ Yr Treas.Bond (ETF) TLT is mostly flat in early trading.

No 9/11 Drop

On the first day of trading following the September 11, 2001 terrorist attacks in the US, the market traded down 7.1 percent. By the end of the week, the DJIA had lost 14 percent and the S&P 500 had declined by 11.6 percent. The declines represented a $1.4 trillion one-week reduction in total market cap.

Other Global Concerns

While U.S. equity markets may be shrugging off the terrorist attacks, other news is having much more of an impact on global markets on Monday. Japan’s Nikkei market was hit hard by news that the Japanese economy has slipped back into recession last quarter. Despite a 1.1 percent decline in the Nikkei, the iShares MSCI Japan ETF EWJ is trading slightly higher on Monday.

China’s Shanghai Composite Index was the lone bright spot in Asia, trading up 0.7 percent.

Disclosure: the author holds no position in the stocks mentioned.