Terrorists in London killed dozens of people and wounded many more in coordinated attacks during the morning rush hour, but they largely failed to rattle the global markets.
In Europe, most markets finished down, and the British pound hit a 19-month low against the U.S. dollar, according to the Associated Press. However, after initially dropping by nearly 1 percent and fluctuating for most of the day, the Dow Industrials, S&P 500, and Nasdaq Composite all finished in positive territory.
Despite the resilience of the U.S. markets, there is still a prevailing feeling that the attacks will discourage travelers in general, to the detriment of many companies in related industries. The price of oil fell by nearly $1 per barrel, after a rise on Wednesday had rocked investors; if travel declines, the thinking goes, demand for jet fuel will recede, too.
Airlines also seemed to be at added risk in light of Thursday’s events. Indeed, Robin Tauck, the president of Tauck World Discovery, an upscale tour operator based in Westport, Connecticut, told the AP that trips to Spain have experienced “a soft period of sales in 2004 and 2005.” Madrid was the target of terrorist attacks in March 2004. However, Standard & Poor’s airline analyst Jim Corridore told the wire service, “We don’t expect that there will be a major impact on international travel.”
Other industries were deemed direct beneficiaries of the terrorist attacks, including companies that sell biometric technology, video surveillance, and other security services, according to the AP.
Many experts, however, believe economic conditions will snap back to “normal” within a few days. Merrill Lynch, for one, sent a report to clients noting that after the terrorist attacks in Madrid, most experts thought foreign economies would be adversely impacted, but that scenario never materialized.
Merrill did note several differences between the Madrid and London attacks, especially that London is a major financial center and that a group calling itself the Al-Qaeda Organization in Europe — which claimed responsibility for Thursday’s attacks — and is now making threats against other countries.
The firm also acknowledged that after the Madrid attacks, there was a so-called flight to quality among investors, but three months later, there was “no impact on monetary policy.” Added Merrill, “the impact on the U.S. economy from tragic events overseas was hardly discernible.”