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CNN Live Event/Special

America's New War: International Markets Prepare for Opening

Aired September 17, 2001 - 03:25   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
COLLEEN MCEDWARDS, CNN ANCHOR: All right, Michael.

Stock markets in Europe have opened for business. With about 30 minutes of trading under their belt right now, let's go to Richard Quest in our London bureau for a first look at the numbers.

Richard, how's it looking?

RICHARD QUEST, CNN CORRESPONDENT: Hello, Colleen.

It's a very big day indeed. Of course, Wall Street will start trading in -- oh, about six -- seven hours time -- first time for four days following the attack.

And European markets have just opened. I'll remind you that there were some very sharp falls in Europe on Friday. This is how things are looking at the moment. London FTSE, you can see just a small gains and losses, really, across the board -- two up and two down. London and Frankfort both are up -- small gains. And Paris and Zurich down -- Zurich is off quite sharply, down around 96 points over one percent, and that's largely because of what's happening in the airline stocks.

Airline, of course, shares are of key concern to investors this Monday with several large U.S. carriers announcing over the weekend that they'll cut back their schedules by 20 percent and lay off workers -- in some cases, tens of thousands of workers.

Liz George is at the London Stock Exchange to give us an early look on how Euro airline stocks are faring. Liz?

LIZ GEORGE, CNN CORRESPONDENT: Richard, thanks very much indeed.

I'll take you across and show you the share prices immediately on those major airlines in Europe. And you can see there's all of them are being sold off very sharply first thing this morning. You've got British Airways down another 2.14 percent, bearing in mind that British Airways actually lost about 36 percent of its share price over the last week. And on Friday, it lost 15.8 percent, so we really are seeing a sell-off going on on these airlines.

You mentioned the Zurich Bosk (ph) being fairly sharply being sold off and Swissair, as well, you can see is one of the reasons for that. It's down 10.26 percent this morning -- a big sell-off going on there. Lufthansa, Air France -- right across the airline sector, we're seeing all of those stocks really being sold off.

And that's despite the fact that a lot of these airlines are beginning to get their services back to normal again. We had British Airways saying that it was flying about 70 percent of its normal services from Heathrow and 80 percent from Gatwick to the States. And Lufthansa is flying 25 of its 26 flights to the States.

So although the fact that these airlines are actually getting their services back and flying as normal, we're still seeing their share -- their share prices falling -- their shares being sold off in the market. That's really on the back of the fact that the industry is going to bear a big cost for the fact that services were shut down over the last few days. In the U.S., the industry is facing a bill of something like a billion dollars. So, really, that's going to hit these share prices fairly hard.

And the volume is also going to be slackening off, and they're saying that really volume's going to be slackening between 30 to 50 percent really looking ahead, as well. So it's not a good picture for the airlines, and they're all being sold off today. Richard?

QUEST: Liz George, many thanks indeed.

Perhaps an indication of the instability now that we are starting to see and the worrying global situation, gold has just opened in London -- it's up $4 an ounce at $290 an ounce. Gold, of course, often seen as the last refuge in times of crisis.

And stocks in the defense industry actually appeared to be bucking a trend -- hardly surprising, of course, because when things get grim, people move into defense stocks.

(BEGIN VIDEO CLIP)

DAVID BUIK, CANTOR INDEX: In the case of defense stocks in a time like this, they will do -- we look like we're going to have a protracted period of war-zone thought process. And, therefore, in the United States, Lockheed Martin, who makes jets and things like that, they are going to do extremely well. And over here, we've got British Aerospace, and in France, EDS. And that's the sort of stock that I think people will be looking to make some money out of during the course of the weeks to come.

(END VIDEO CLIP)

QUEST: Now, that's as a traditional move, of course, defense stocks always seem to gain when there are times of global instability.

To the dollar now and a quick look at how the currency markets are trading. Traditionally, one would have seen a flight to the dollar at times of unease, but not at the moment. These are the way the rates are trading at the moment -- the euro, a strong gain and now trading at 92 U.S. cents; the Japanese yen has put on a cent in the past 24 hours; and sterling, too, is up at 1.4769.

Of course, in six hours the New York Stock Exchange reopens after the longest closure since the Great Depression. And those who live in the financial district are beginning to return to their homes. But as Brian Cabell reports, some residents are finding there's little to go home to.

(BEGIN VIDEOTAPE)

BRIAN CABELL, CNN CORRESPONDENT (voice-over): There is hustle and bustle on Wall Street, but it's not the usual kind.

Police cars control the streets along with the Humvees. Pedestrians, it seems, are blocked at every other intersection. Wall Street and the surrounding neighborhood resembles an armed camp -- a dusty armed camp. Some of the merchants here are struggling to return to normal.

UNIDENTIFIED MALE: We got meat, we got bagels.

CABELL: But when a restaurant manager's meat and cheese and milk and juice are all spoiled, as they are at the William Street food court, it can be tough.

UNIDENTIFIED MALE: We tried to clean the place. And we got no light, we got no water, so we don't know what we're going to do now.

CABELL: That's the problem: basic services are down, a reported $15 billion in communications infrastructure losses alone. Utility companies are working 24 hours a day to restore.

Most of the sidewalks and streets remain filthy, covered by ash and dust. It fills the air on choking, visible dust. Gages check the asbestos levels every several blocks.

But still, the curiosity seekers arrive, while many of the residents leave, their apartments no longer livable.

UNIDENTIFIED MALE: They're using it as a staging area to clean out the rubble.

CABELL: After four days, psychologist Alan Ralph (ph), along with his dog, moved out. And when he and his neighbors can move back, no one knows.

ALAN RALPH, PSYCHOLOGIST: We want to rebuild our neighborhood. We want to go back and live there. We want to get back in there, to show the terrorists that we have not -- we have not been displaced by them.

CABELL: But they have been displaced temporarily. Thousands of Manhattanites are out of their homes.

UNIDENTIFIED FEMALE: I feel blessed that I'm here. I feel blessed that I have supportive friends and -- see what happens.

CABELL: Many will return to work this week, as the New York Stock Exchange reopens. But this neighborhood of high rises and high finance is far from normal. According to some reports, 15 million square feet of office space have been destroyed here, 12 of them have been damaged.

Osmuth Patel's (ph) little sidewalk booth did survive. He's just about ready to sell his magazines, newspapers and candy again. But he's worried.

OSMUTH PATEL: People are still coming to work, but ...

CABELL: He's not sure whether Wall Street's usual pedestrians, his customers, will return in force anytime soon.

Brian Cabell, CNN, New York.

(END VIDEOTAPE)

RICHARD QUEST, CNN, LONDON: A reminder that New York opens in a few hours' time.

The consensus seems to be that the market will be down several hundred points at the open.

But there have been some encouraging signs. Many companies have announced over the weekend that they are to initiate, or to step up, longstanding shared buyback plans. These are used by corporations to buy back their stock when the price is low. And it's often seen as a way of not only returning money to investors, but also giving a boost of confidence to the market.

Some very large buybacks are planned. For instance, FleetBoston, the bank, has said it will buy back $4 billion worth of shares. The First Data Corporation says it plans to buy back $700 million of its common stock. Same again for Siebel Systems, which is the world's biggest management software purchasing company. And they were -- they say they're going to buy back $500 million.

That's the sort of confidence-building measure that people will be looking for in the market when it opens in New York, again around about six or seven hours' time.

Hong Kong and Tokyo and Singapore have been doing the business in the previous year.

Andrew Stevens is there to bring us up to date on the Asia market, then.

Andrew, how's it gone?

ANDREW STEVENS, CNN CORRESPONDENT: Richard, as you say, all markets in Asia sharply lower at the close or near the close of trade today. Even though Wall Street was closed, most investors are expecting a major sell off in the financial markets in the U.S. And that will see a sharp slide in -- certainly in Wall Street, when it opens a little later today.

The threat of recession in the U.S. is also putting extra pressure on markets that have already been weak for months.

Well, Tokyo's NIKKEI extending last week's five percent decline today, closing at a new 17-year low. The average fell another five percent, to close just above the 9,500-point level.

Seoul KOSPI index down 2.8 percent, now at its lowest close since December 1998.

The tech KOSDAQ index tumbling eight percent. There's hopes there for recovery in the global IT sector.

Australia's S&P ASX 200 down 4.7 percent to a 17-month low, as investors priced in a fall of as much as 10 percent, when New York resumes trading.

Here in Hong Kong, where the market is still open, property stocks are leading the downturn. Hong Kong's dominant carrier, Cathay Pacific Airways, the worst hit among the blue chips -- currently down about 11 and a half percent, with a little under 30 minutes of trade left here.

Well, throughout Asia, other airline stocks also suffering sharp declines, including Korean Air and Japan Airlines.

That is a wrap up of the business news here. Richard, not surprising all the markets all down.

Back to you in London.

QUEST: Many thanks, Andrew.

A quick reminder that London and Frankfurt showing some more gains. It's Paris and Zurich on the European bosses that are showing losses at the moment, with many hours to go.

And the world will be watching Wall Street when stocks begin trading. That all happens in around six hours' time.

Colleen, back to you at the CNN Center in Atlanta.

MCEDWARDS: All right.

Richard Quest in London, thanks so much.

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