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While you were sleeping: Markets steady after Brussels attacks

Wednesday 23rd March 2016

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Gold and US Treasuries rose, while Wall Street was steady after earlier declines, after attacks in Brussels killed at least 31 people and prompted increased international security alerts.

US Treasuries rose as investors fled to their perceived safety. Yields on the 10-year note fell 1 basis point to 1.91 percent in early afternoon trading in New York.

“It raises more defensive positioning in risk assets, and puts money into Treasuries,” John Briggs, head of strategy for the Americas in Stamford, Connecticut, at RBS Securities, one of the 22 primary dealers that trade with the Federal Reserve, told Bloomberg.

Wall Street was steady to higher. In New York trading at 1.14pm, the Dow Jones Industrial Average inched 0.08 percent higher, while the Nasdaq Composite advanced 0.4 percent. In New York trading at 12.58pm, the Standard & Poor’s 500 Index gained 0.2 percent. Earlier the S&P 500 had dropped as much as 0.5 percent.

The Dow moved higher as gains in shares of Pfizer and those of UnitedHealth, last up 1.4 percent and 1.2 percent respectively, outweighed declines in shares of Goldman Sachs and those of American Express, last 1.2 percent and 0.8 percent weaker respectively.

“The market appears to be more resilient than you’d expect after a terrorist attack,” Michael Antonelli, an institutional equity sales trader and managing director at Robert W Baird & Co in Milwaukee, told Bloomberg. “We’re still in the negative, but I’m shocked we’re not down more. When you wake up to this news, it’s definitely going to put a damper on market sentiment.” 

Airline and other travel stocks on both sides of the Atlantic fell in the wake of the Brussels attacks. Shares of American Airlines fell 1.3 percent, while those of Delta Air Lines dropped 1.6 percent.

Spot gold rallied to a high of US$1,259.60 an ounce in the wake of the attacks, and was 0.9 percent higher at US$1,254.30 an ounce in early afternoon US trading, according to Reuters. US. gold futures for April delivery were up US$10.60 an ounce at US$1,254.80.

The Chicago Board Options Exchange Volatility Index, or VIX which is known as Wall Street’s fear gauge, last traded 0.5 percent higher at 13.86.

“The market may be getting desensitised to this kind of violence,” Scott Brown, chief economist at Raymond James in St. Petersburg, Florida, told Reuters.

The Dollar Index, which measures the greenback against a basket of six major currencies, last traded 0.4 percent higher.

Meanwhile, shares of Dean Foods tumbled, trading 10.6 percent lower by midday in New York, on concern about its sales outlook as Wal-Mart Stores, its largest client, plans to build a milk-processing plant.

Wal-Mart’s “decision to in-source milk processing is clearly an unfavourable development” for Dean, given that the retailer made up 16 percent of 2015 sales, Matthew Grainger, a New York-based analyst for Morgan Stanley, said in a report Monday, Bloomberg reported.

In Europe, the benchmark Stoxx Index ended the day with a 0.2 decline from the previous close. Earlier in the session it dropped as much as 1.6 percent, following the attacks at Brussels’s airport and on the metro system. The euro-zone’s travel and leisure stocks including Ryanair and Accor fell.

The UK’s FTSE 100 eked out a 0.1 percent advance, as did France’s CAC 40, while Germany’s DAX added 0.4 percent.

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