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CNN Live Event/Special

America Under Attack: How Are The Markets Reacting

Aired September 13, 2001 - 06:40   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.
JONATHAN MANN, CNN ANCHOR: Thousands are feared dead. The United States and its NATO allies are preparing to respond. And families have been torn apart, perhaps irreparably. But beyond the devastating human toll, there could be another impact from all of this, specifically on the global economy and the markets.

Richard Quest joins us now from London, where he's been watching business unfold. Richard?

RICHARD QUEST, CNN CORRESPONDENT: As a matter of fact, Jonathan officials at the European Central Bank will meet in Frankfurt later this Thursday. They'll be deciding what more they can do to limit the global economic impact of the attack on the World Trade Center.

There have been calls for European countries to cut interest rates to help stabilize the global economy to bring an air of stability in this uncertain time. But many analysts do not expect the ECB to cut its short-term interest rates when they do have that meeting.

Now, let's take a look at the latest currency rates that we're seeing around the globe. You'll see now that the U.S. dollar has gained back some cent of 119 Japanese yen against the euro. It's just at 90 U.S. cents to the new single currency.

The new European trading day is underway. Let's catch up with how trading is going and what stocks may be of interest. Liz George is at the London Stock Exchange. Liz?

LIZ GEORGE, CNNfn CORRESPONDENT: Richard, thanks very much indeed. Notwithstanding the feelings here very much of shock and distress at what happened in New York, there is a feeling of wanting to conduct business as usual and really getting on with trading. Although, of course, volumes are very, very light and trading is extremely muted.

Now, we saw a very volatile day on the markets yesterday. I was talking to Jeremy Stretch (ph) at the Bank of Canada earlier and he was saying people really didn't have any idea where to price things. And that's why we were seeing such huge leaps around in the markets and such enormous volatility. And really today, it's likely to be very much more of the same.

The markets are open and this is where they've opened at, all of them trading slightly lower today. Towards the end of the day yesterday, we began to recover some of those dramatic losses. But now, they're beginning to fall off again, everyone really now looking towards the U.S., hoping that the U.S. will open and also give some direction; but, of course, being very aware that once the U.S. does open for trade on the equity markets, there may be some dramatic reaction there. A big sell off going on there until things calm down. And people are saying really it's going to be about four weeks before we begin to see any calms return.

Let me just show you one or two individual stocks. Of course, it was the consumer cyclicals which saw a very big sell off, companies like British Airways. British Airways losing around about $9 million a day from its planes being grounded. It's down 7.21 percent.

The insurers, of course, which have risk over in the U.S. saw a very big sell off yesterday. Today, they're beginning to come back a little bit. Allianz, Europe's largest insurer, up 1.65 percent in the early market. And LVMH, the consumer luxury goods company, also selling off today, worrying about what impact this is going to have on the U.S. consumer.

Richard?

QUEST: Liz George, at the London Stock Exchange.

Gold and oil have been much in the news. Let's catch up with how those have traded, starting with gold, where the price is now, it's around $278 an ounce. It reversed some of the gains that were seen in the initial panic after the attack, now markets starting to calm down somewhat.

And black crude at around $28 an ounce, again, prices starting to come back as people realize that supply will be maintain.

Over now to Maggie Lake in New York, to bring us up to date with events on financial markets. I always look forward to that. Maggie?

MAGGIE LAKE, CNNfn CORRESPONDENT: Richard, of course, stock -- the stock markets will not be trading today. That gives us all time to contemplate the event. And, of course, the task of picking up the pieces now lies ahead. Companies are grappling with how they will cope in the wake of the attack.

Among the hardest hit will be the airline industry. For the first time in history, all commercial air travel in the United States was suspended Tuesday. Airports were again closed Wednesday and service will be limited at best later today, which is, of course, Thursday morning. The affect of the disruption is staggering. The airline industry generates about 90 to $100 billion in revenues. About 4,000 planes flay a day domestically. While flights are grounded, the losses work out to about $250 million a day.

Experts say even when airports reopen, security measures are likely to mean it is many months before air travel is back up to speed. Because of that, analysts say the industry very well may exceed the $2 billion loss suffered the year of the Gulf War. And we've already seen Midway Airlines, which has been struggling financially, say they have suspended all operations and have laid off 1,700 people immediately. And it is not just U.S. airlines. Asians carriers are seeing their losses now, as more and more flights to the U.S. are canceled. Europe certainly will be affected, as well. And it's not just airlines. The entertainment, hotel and restaurant industries are all considered vulnerable. As we will see, this event will be felt for months to come.

Jonathan, back to you.

MANN: Maggie, thanks very much.

The markets, the air travel system in the United States and above all, the victims. We want to remind you that for more information on the attacks or the aftermath, please consult our Internet site. We have complete information, including the latest reports from the United States and around the world, photo galleries, video and maps. And you'll find it at cnn.com.

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