Terrorist attack rattles global markets

Terrorist attack rattles global market

BANGALORE: In one of the major terrorist strikes on the United States, the

twin towers of the World Trade Center in Manhattan was brought down after two of

the hijacked commercial planes crashed into the building.

The attack left two of the world's most powerful markets, the New York Stock

Exchange and the Nasdaq crippled. Both the exchanges have now been shut down

indefinitely. According to sources, the New York Stock Exchange had closed for

the day. In addition, New York airports and bridges and tunnels leading into the

city from New Jersey have also been sealed off.

One more plane struck the Pentagon bringing down the part of the building. A

fourth airline has crashed near Pennsylvania, southeast of Pittsburgh.

Earlier on Monday, the Nasdaq closed at 1,695.38 points, while the Dow Jones

closed at 9,605.51 points. There are about five Indian companies listed in the

American stock exchanges, Infosys, Wipro, Satyam, Rediff.com and ICICI.

Meanwhile the attack had no effect on Indian indexes, as markets had closed

before reports reached here. The Sensex closed at 3,150.40 points, while the BSE

IT closed at 1,386.82 points. Incidentally BSE IT ended on a positive note of

18.37 points against its previous days closing.

The news had effect on the global market with Swiss blue chips slumping to

their lowest level in three years on Tuesday, lead by insurance companies. The

blue-chip Swiss Market Index closed down 7.1 per cent at 5,695.1 points, its

lowest close since October 1998, as investors fled the equity market. Losers

outnumbered gainers 28 to one in relatively solid volume with 38 million shares

traded.

Repercussions were also felt on the Dutch shares that reversed earlier gains,

and slumped to fresh lows on Tuesday. Insurers and financial stocks, which had

initially led the market higher, quickly turned lower and dropped sharply.

"The market is purely driven by what happened in the United States, while

oil stocks are firmer, because people immediately think about the Middle

East," one trader said.

ABC News adds from New York:

Wall Street exchanges did not open today, and other US markets halted trading

following the incident. Harvy Pitt, chairman of the Securities and Exchange

Commission, said trading would resume as soon as it is practical to do so.

The Federal Reserve reported it is prepared to provide additional money to

nation's banking system as needed following the apparent attacks. The promise to

supply additional money to the banking system was similar to a pledge issued on

the morning after the October 1987 stock market crash, when the market plunged

by more than 500 points in one day of trading.

Damage cannot be assessed



It was also difficult to make phone calls to the downtown business district
and throughout the greater Manhattan area. Media contacts at several investment

banks in Manhattan were either not available or not answering phone calls.

Business and trading in other parts of the country were affected also. In

Chicago, businesses, stock and commodities exchanges were also evacuated.

Several top financial services firms have offices in the World Trade Center,

including Morgan Stanley, Credit Suisse, Commerzbank and Deutsche Bank.

Representatives from those banks did not return calls seeking comment.

Many financial services firms have moved their headquarters from lower

Manhattan to Midtown, but still maintain trading operations close to the Wall

Street area. A spokesman for Bear Stearns, which does not have offices in the

World Trade Center, says the firm is urging its employees to stay put.

Just after the incident, equity futures plunged on before the opening bell.

NYSE officials said shortly afterwards that the market open would be delayed

indefinitely.

September futures for the Standard & Poor's 500 index sank 15.50 points

to 1,080.20, while Nasdaq 100 futures plunged 32.50 points to 1,338. September

futures for the Dow Jones industrial average tumbled 100 points to 9,530.

Attack rattles global markets



Foreign financial markets fell sharply on news of the attacks. The London
FTSE index plummeted 5.7 per cent, its biggest one-day fall since 1987. Oil

prices in London spiked up by 3 per cent.

News of the attacks sent investors seeking traditional safe haven assets like

U.S. Treasuries, which rose by almost a full point before paring gains. Traders

said dealings froze in many markets. Several brokers, including Cantor

Fitzgerald, are based in the World Trade Center in lower Manhattan.

"There are no prices. There is no trade," said one emerging markets

trader in New York. "All the brokers are downtown in the Trade Center, so

there are no prices." Dealings in many other asset markets were thin.

"No one is going to be focused trading mortgages with what's

happening," David Montano, mortgage strategist at Credit Suisse First

Boston said.

Damage may be in billions

The damage caused in the center of the global financial world could paralyze

markets for some time to come, especially after the collapse of both World Trade

Center towers. Insurance experts quoted by Reuters say the damage caused by the

two airplanes will cost insurers billions of dollars.

"It is safe to assume claims will be in the billions," said Robert

Hartwig, chief economist for the Insurance Information Institute told Reuters.

(The Associated Press and Reuters contributed to this report)