Investors to face more volatility
Those responsible for keeping global growth ticking over, US consumers, are showing signs of fear. While the US Government has promised an immediate US$15 Billion in funding, that amount will not last long if people significantly reduce their amount of air travel.
There are many ‘Ifs’ following the US terrorist attacks and share markets will continue to react wildly as they try to guess the future spending intentions of US consumers in particular.
Investor funds have been flowing out of those stocks with exposure the current crisis eg insurance and airline stocks. A ‘ flight to quality’ has seen stocks such as Telstra rise for no other reason that it is seen as insulated from the current crisis. Other industries seen as safe havens include property trusts, general retail, food manufacturers and packaging.
It will take some time before the effects recent events can be quantified in the earnings of companies and until then investors will be best served not to panic sell, but to keep a lookout for opportunities after the next market upswing is confirmed.