Terrorist attacks affect the financial markets only in the short term, because in the long term investors pay attention mainly to fundamental factors from Société Générale. This was evident, among other things, after the bombings in Brussels on Tuesday, to which the stock exchanges reacted with falls, but during the day the situation was improving, and the day on most floors ended in pluses. The increases should continue in the coming months as well. This is facilitated by better than expected readings of PMI indices and the ECB’s actions.
– In the short term, terrorist attacks are a negative factor that affects the bond market, as well as the foreign exchange market and the stock market. The most visible changes are just after such events have taken place. In the long run, the situation always stabilizes, so it is difficult to say that in this case there will be significant changes in the real sector, chief economist at Société Générale.
This was the case on Tuesday when the terrorist attacks in Brussels took place. At the opening of the session on the main European stock exchanges, the shares were cheap. In the case of the German DAX or French CAC 40, the losses amounted to almost 2 percent. The American S&P500, which opened 0.5 percent below the Monday closing, lost less. Over time, the situation stabilized, and most stock exchanges ended their day on the plus side.
– A series of attacks in Belgium caused that in the case of the American market we are still dealing with some kind of uncertainty. In January and February there were greater turbulences on the financial markets, March brought stabilization. However, it should be remembered that these are all external factors.
Since mid-January 2016, USD has gained over 5.5% against the euro. According to chief economist, this trend may continue in the following weeks. In a short time it is possible to reach the levels of ca. USD 4.20 per euro.
– The zloty is one of the undervalued currencies, hence the potential for strengthening. On the other hand, there are also numerous risk factors – not only external but also political ones. However, this somehow inhibits the zloty from strengthening – emphasizes the economist.
The situation on the stock exchange and foreign exchange markets may also be affected by another communication on the credit rating of our country. In mid-May 2016, Moody’s will provide its updated assessment.
The condition of the FX market will also be affected by readings of PMI indices for European economies. The March ones were a positive surprise. The readings for both the service sector and the industrial sector in the euro zone turned out to be better than in February. They were also higher than analysts’ expectations.
– This may indicate that the GDP growth rate in the Eurozone and the entire European Union will be slightly higher than expected by investors. Both PMI indicators and the latest reading of the IFO indicator for the German economy show that after the destabilization of the markets at the beginning of the year, March brought calming of the situation.
The economist also stresses the positive impact of the activities of the European Central Bank. During the March meeting, the bank announced that it would extend the scope of the quantitative easing program to corporate bonds. The communication led to growth not only in the debt securities market, but also in the equity market.
– We may be slightly optimistic about the first quarter. Subsequent quarters, if there is no surprising factor in the form of e.g. further attacks, should also surprise us positively – concludes.

Categories: Business