US - Fidelity Investments has warned the investment community against a knee-jerk reaction to yesterday's events.
European markets fell sharply by between 5% and 10% and in London the FTSE 100 fell by 5%. Shares in insurers, airlines and hotels were among the worst affected. Bonds rose, as did the the price of oil - by 13% - and gold, seen as a safe haven, rose by 5%.
The pensions giant said: “The Trade Centre blast comes at a time when markets have been very volatile.”
“There was a belief that although news on the economy might not improve in the short term, at least some of the ‘bad news’ was already reflected in share prices, and central banks were taking measures to stimulate growth.”
Eight of Fidelity’s funds, worth £2bn between them, had trading temporarily frozen today.
Fidelity said the plane crashes were political in nature and their economic impact was not clear. The company compared the attack to the Gulf War in 1990/91 where markets initially declined in reaction to news of a possible war in the Gulf; but investors gradually turned their focus on the economic and corporate factors that affect share prices and stock markets subsequently recovered.
“At this time, it is difficult to separate the current emotion that investors are no doubt feeling from the ‘fundamentals’ of investing,” said Fidelity.
The company concluded that investors should not adopt a “knee-jerk” reaction to the present state of the markets.
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