Friday’s terrorist attacks in Paris had little lingering effect on the world economy when markets reopened Monday, with the U.S. dollar up and global stocks surging.
The dollar reached its highest point since April, trading at slightly above $1.06 per euro in Tuesday trading on European markets. While inflation remains below target levels, a stronger dollar could bolster the Federal Reserve’s case for raising interest rates when it meets in December.
Currency strategist Sue Trinh, with RBC Capital in Sydney, said that “[i]n terms of FX price action, we’ve reverted to the trend that was in place before the weekend’s terrible events [in France], which is euro underperforming into the December ECB [European Central Bank meeting] on expectations of increased QE.”
Meanwhile, in New York, the Dow Jones index closed up 237.77 points on Monday, to 17,483.01, led by strong performance by energy stocks. The S&P 500 was up about 1.49%, or 30.15, to 2,053.19, and the Nasdaq Composite index rose by 1.15% or 56.73 points.
Shares in Tokyo rose in Tuesday trading as investors expected increased government stimulus in the wake of Monday’s report that Japan’s economy was back in recession. The Nikkei index was up 1.2%, South Korea’s Kospi closed 1.1% higher and the Hang Seng index in Hong Kong rose 1.2%.
Early trading in Europe on Tuesday saw stocks trading higher there as well. The FTSE 100 in London was up 1.7%, while the German DAX was trading 1.4% higher and France’s CAC up 1.7%. On Monday, the French index dropped over 1% in early trading before recovering and closing down 0.1%.
As terrorist attacks have increased in frequency, lasting market effects have become rarer.
“The first reaction is panic, but then people take a look at the history books,” Andreas Koester, of UBS Global Asset Management, told the Wall Street Journal.