Resilience Has Been Markets’ Answer to Terror Since 9/11 Attack

European stocks pared losses and U.S. futures rebounded after a terror attack in France killed dozens of people, the latest display of market resilience in keeping with recent history. Over the past 15 years, financial-market reactions to terror have proven increasingly short-lived.

At least 84 people died and many were injured when a driver plowed his truck into a late-night crowd in the coastal city of Nice on Bastille Day. The rampage, which ended after the driver was shot to death by the police, forced President Francois Hollande to call up military reserves and extend the state of emergency that he had intended to let lapse.

It’s the third major terrorist attack in France since the January 2015 shootings at the Charlie Hebdo satirical newspapers and a kosher store near Paris. Past incidents, such as Madrid’s train bombings that killed 191 people in March 2004 and blasts that left more than 50 dead in London in July 2005, had spurred declines in equities that were erased days or weeks later. Recoveries have been swifter in recent years.

“On one side, we are market members, on the other side, we are human beings,” said Guillermo Hernandez Sampere, the head of trading at MPPM EK in Eppstein, Germany. His firm manages about 250 million euros. “For the market, it’s not irrelevant from a human perspective, but from an economic perspective, as sad as it might sound, it’s an incident that happens on a regular basis. And markets have gotten quite used to that.”

Here’s a look at how past terror incidents affected markets.

March 22, 2016: Brussels

The benchmark BEL 20 Index dropped as much as 1.3 percent on Friday morning as coordinated bomb attacks later claimed by Islamic State militants killed 32 people in the Belgian capital. The gauge recovered all losses by the end of the trading day, closing 0.1 percent higher. The Stoxx 600 reversed declines of as much as 1.2 percent to end 0.2 percent up.

November 13, 2015: Paris
Markets opened to declines on Monday after coordinated attacks by gunmen and suicide bombers in Paris the previous Friday. Organized teams killed 130 people in cafes and at the Bataclan concert hall. After sliding as much as 1.2 percent, France’s CAC 40 Index closed less than 0.1 percent lower. The Stoxx 600 rose 0.3 percent the same day.

July 7, 2005: London

The U.K.’s FTSE 100 Index fell 1.4 percent, the most in almost a year, as bombs killed more than 50 people in subway attacks. The gauge recovered the next day. The yield on 10-year gilts slipped eight basis points before rebounding the next five days. The pound, which weakened 0.7 percent against the euro, continued its decline before recovering the following month.

March 11, 2004: Madrid

Bombings in commuter trains killed 191 people. That day, Spain’s benchmark IBEX 35 Index fell 2.2 percent, the most since the previous November. It dropped through March 15, when it reached its lowest level of the year, before rebounding at the beginning of April to its level before the bombings.

Oct. 12, 2002: Bali

The benchmark gauge for Indonesian equities sank 10 percent, and the rupiah fell with the nation’s bonds after bombings in a Bali nightclub killed more than 200 people. By November, the Jakarta Stock Price Index had erased the slide. It ended the year up 8.4 percent.

Sept. 11, 2001: New York

U.S. markets shut down after the 9/11 attacks that killed almost 3,000 people and brought down the World Trade Center’s twin towers. When equity trading resumed the following week, the Standard & Poor’s 500 Index slumped 12 percent in five days, the most since the aftermath of the October 1987 crash. By Oct. 11, it had recovered its losses.

Gains in Brent crude, up 5.5 percent the day of the attacks, were erased within a week. Yields on 10-year Treasuries fell, reaching a low in early November, before recovering their pre-attack levels later that month. The dollar, which tumbled the most since 1998 on Sept. 17, had wiped off declines by the following month.

After the latest attack in Nice, the Stoxx Europe 600 Index dropped 0.2 percent at 2:27 p.m., after sliding as much as 0.7 percent. France’s CAC 40 Index more than halved an intraday slump of as much as 1 percent.

“If we compare the impacts on stock markets there has been a pattern visible showing that the negative impact has declined over time,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “Investors got used to such attacks, we have seen over time looking at 9/11, London, Madrid and most recently in Paris and so on. It could increase the political risks across Europe, but it’s impossible to quantify the impact of that on stock markets.”

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