16 Nov 2015

Markets brace for Paris fallout

3:02 pm on 16 November 2015

Financial markets have so far had a muted reaction to the Paris attacks, with sharemarkets in the Pacific and Asia falling modestly, but currencies appear to have taken the events in their stride.

Markets in Europe, however, have not yet opened.

NZX

The NZX 50 has fallen about 0.7 percent to 5948. Photo: NZX / Supplied

The New Zealand sharemarket's benchmark NZX 50 has fallen about 0.7 percent to 5948, while Australia's ASX 200 initially fell more than 1.2 percent before trimming its losses to settle about 0.6 percent lower.

Tokyo, the region's biggest market, fell about 1.4 percent within minutes of opening.

The US dollar, seen as a safe haven in times of uncertainty and nervousness, was slightly stronger against most major currencies.

But about 1.15 pm, there was little change to the New Zealand dollar, which was trading at 65.3 US cents.

New Zealand dollar

Photo: 123rf

At such times, investors quit risky assets such as shares and secondary currencies like the New Zealand and Australian dollars, and seek safety in the US dollar, the Japanese yen and government bonds, ANZ Bank senior currency strategist Sam Tuck said.

But the reaction might be short-lived, he said.

"The main reaction may be only a couple of days but what it does do is weigh on sentiment, for instance we have the (US) Federal Reserve in five weeks and this will impact how the markets are thinking about that in the run-up to that."

Mr Tuck said sharemarkets in the Middle East, which were open on Sunday, had also fallen.

Meanwhile, French financial markets will be open as usual on Monday, stock and derivatives exchange Euronext said.

A spokesman said: "Our priority is the safety of our staff and there will therefore be extra security in place in Paris on Monday."

A rough start for financial markets was already expected this week because of weakness in the US and general global uncertainty.

- RNZ / BBC

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