Shares drop on terror fears, but not as bad as expected.

The Australian market had dropped 1.4 per cent at the opening of the first trading session since the terrorist attacks in the French capital on Friday.  Past experience of major terrorist attacks showed share markets recovered within a couple of days, with consumer spending also rebounding fairly quickly.

The ASX200 index finished at a one-and-a-half-month low, despite coming from the days lows as oil and gold-related counters rose on the back of firmer commodity prices. Earlier on in the morning session, the benchmark index had plunged as much as 1.1 percent to an intra-day base of 4,979 points, which marked the bourse's lowest level since September 30.

So the expected hard drop across all markets hasn't seemed to happen, while terrorist attacks like these tend to send an initial shock through financial markets and cause immediate declines in industries such as tourism, the economical effects aren’t normally that long lasting. And in some cases, terrorism and ensuing periods of increased investment security and defense spending are a boost to economic activity. Experience of major terrorist attacks showed share markets recovered within a couple of days, with consumer spending also rebounding fairly quickly.

In Paris, the first, spontaneous reaction was unity after the Charlie Hebdo attack in January this year. Up to 4m people took peacefully to the streets on January 11th, with an estimated 1.6m in Paris alone. The “Republican March" filled the capital’s boulevards with children in push chairs, students, pensioners, Catholics and Muslims. This has happened again over the last two days.