How will Global Markets react after Paris Attacks?

Global stocks may be set for a short-term sell-off on Monday after Islamist militants launched coordinated attacks across Paris that killed 129 people. However, analysts state that a prolonged economic impact or market reaction was unlikely.

There has been condemnation by world leaders and outpourings of support for Parisians from around the globe, but I forecast this would be likely to have only a knee-jerk impact on investment decisions globally.

French stocks, particularly those exposed to the country's large tourism sector, are likely to suffer the biggest falls.
France has the largest number of tourists in the world and the sector accounts for almost 7.5 percent of GDP.

Historically, any kind of terrorist or warlike incident has triggered a move to rush to safety, namely that of gold and the use of US treasury stocks. Europe has suffered similar coordinated attacks on public transport systems previously, in Madrid in 2004 and London in 2005. Almost 250 people were killed, and more than 2,500 injured in those bombings on trains and buses by Islamic State-inspired militants.

History dictates that if the economic impact is limited – and I think it will be – that markets will quickly recover and go on to focus on other things. Investors  will be a bit more cautious on their stance on the higher-risk  sectors of the markets.