Michael Pascoe writes:

There are a million things that move
markets, but there might be a message about the American versus the European
psyche in the different reactions to the London airline bomb
plot story.

European markets fell but US markets rallied. What Europe saw was a worrying confirmation that terrorists remain very active
and have major disruption of travel and commerce in their cross-hairs. What the
US saw was a triumph over terrorists, the good guys winning.

Both sides of the Atlantic also saw oil prices
fall in the wake of the story. Europe realised it was because of the threat to
consumer confidence that renewed travel disruption could cause, which in turn
means a weaker economy, less travel and therefore less demand for oil. The US saw
relief from higher oil prices – it’s more about the price of gas at the pump,
domestic rather than international, short-term rather than medium or long.

In fairness to American traders though,
there’s also the reality of how markets have performed after every terrorist
attack from 9/11 on. There’s been a knee-jerk fall followed by a rally when
investors realise no fundamental damage has been done to the economy. The
Americans now are skipping the knee-jerk and going straight to the rally.

The glass is half-full, the glass is
half-empty. For airline and travel stocks around the world though, the glass
contains a liquid which now is suspicious until proven otherwise.

Peter Fray

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