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CNN Live Event/Special

America Under Attack: Foreign Markets Open

Aired September 14, 2001 - 01:51   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: And the American Automobile Association has released figures that should ease fears of widespread price hikes across the United States. There were reports Thursday of some outlets doubling their prices. That sparked fears of nationwide panic buying with long lines forming in some states, such as Indiana. But the AAA says that prices nationwide have risen by just eight- tenths of a - of a cent. That's an increase, it describes as barely perceptible.

JIM CLANCY, CNN ANCHOR: Well the concerns of the fallouts over this tragedy spread around the world and that is the global economic situation. Of course, the markets in the United States closed until Monday, but they are open right now in Asia. Let's go now to London and Richard Quest (ph) for the latest there.

RICHARD QUEST, CNN CORRESPONDENT: Indeed Jim, investors around the world, they are still trying to come to terms with the impact of what happened on Tuesday. It's now been three days since Wall Street last did business and of course, without New York's guidance, it's been a very different sort of trading world, especially in Europe and Asia.

Look at the numbers, Tokyo is up more than three percent. Hong Kong is down half a percent. Singapore is down three percent. I think one has to point out that the market did suffer very sharply in the days after the attack in New York and perhaps that number in Tokyo is something of a rebound.

A quick look on the currency markets, trading is extremely subdued. The dollar is holding below the 119 level, coming in at 119.03, the euro at .9095, the pound sterling is trading at 1.47, although what we're hearing from traders is that it's about 50 percent of normal activity taking place, New York being such an important part of the foreign exchange market.

No surprises from the European Central Bank on Thursday. It decided to hold interest rates exactly where they were. And in the United States, the Chicago Bond Market opened its bids (ph) on Thursday. It was a shortened trading session where Treasury prices went higher. But the market's big test, of course, is on Monday. That's when U.S. stock exchanges will resume trading after the four- day shutdown.

As rescuers continue their grim task of sifting through the rubble in New York, it's now becoming clear the size and scale of the damage inflicted not only from the destruction to the World Trade Center, but to the surrounding buildings and businesses. The insurance industry believes the cost of repairing the physical damage could be anything up to $15 billion.

CNN's Charles Hudson now reports from Zurich and London on the world's insurance companies who'll pay the bill.

(BEGIN VIDEOTAPE)

CHARLES HUDSON, CNN CORRESPONDENT: Union flags are flying at half mast outside London's Lloyd's Insurance market in sorrow at Tuesday's terrible human toll. Now the industry is also calculating what it needs to do to cover the financial cost.

There's the physical destruction of buildings and airplanes, but beyond there'll be life and injury claims, liability claims against the airlines over lack of security and above all, business interruption, loss of sales as lower Manhattan remains closed. The industry can only guess how much that will come to.

STEPHEN CANE, INTL. UNDERWRITING ASSOC.: All we know is it's huge. It will probably be the largest insured loss that we've had, may not be, don't know.

HUDSON: Analysts say stock markets wiped $50 billion off the value of major insurance companies right after Tuesday's attacks. Those stocks have now come back up to levels, which reflect that some now seen as the most likely final cost -- $20 billion. That is more than the 10 to 15 billion the industry is suggesting, but not enough to deserve the calm at Europe's other major insurance center, Zurich.

Zurich financial services may have to pay out hundreds of millions of dollars. Its neighbor, Swiss Re is looking at a figure closer to a billion. Executives share universal shock and distress at the attacks, but say financially they can take them in stride.

UNIDENTIFIED MALE: This is the moment that we are in business for. We absorb the large risks that the world has and this is one of those risks. And we stand ready to help our clients get through the financial aspects of these kinds of events.

HUDSON (on camera): What the industry is really saying is this: This is what we're here for. We want to help with the financial impacts of these attacks and we're working together to do so.

Charles Hudson, CNN, London.

(END VIDEOTAPE)

QUEST: That's all the business news from London for the moment. European trading starts in the next couple of hours. Now back to Colleen in Atlanta.

Colleen, it may seem somewhat unfortunate and very sad that we do talk about money at times like this, but of course this was an attack at the heart of world capitalism.

MCEDWARDS : Yes, a symbol and a reality Richard.

CLANCY: Richard, I have a question for you before you go, and it's something I didn't expect to see. I'm hearing -- I'm getting e- mails. Some of the financial newsletters I get advising Americans don't change your investments. Leave them right where they are. Don't move them right now. It'll send the wrong signal -- others saying go out there and spend some money. Show consumer confidence.

What do we even make of this? Is there a reaction - a human reaction coming from the money managers?

QUEST: Well, at the moment everybody is saying pretty much don't do anything. In times of crisis, in times of panic, the worst thing that any investor can do is take a decision that they will regret shortly thereafter.

There's no doubt there will be a reaction in the U.S. markets when they open on Monday, but markets have a habit of coming back. They have a knee-jerk reaction. We saw that quite clearly, Jim, just on Tuesday. They saw what was happening in New York. They reacted.

Now, we're seeing the unwinding of those positions. Europe didn't fall very heavily yesterday. Tokyo's actually up today. This is entirely normal. Markets react on the instance of news, so I would strongly suggest that wait and see.

On the question of the why the question of recession, on the why the question of what this will mean to economists, the jury is still out -- people don't know. If this crisis in New York causes a consumer crisis of confidence in the United States it will make matters worse. But there's little doubt that no investor should take a decision in a time of panic.

Wait and see exactly what happens. There'll be plenty of time to make your decisions further down the road.

CLANCY: All right Richard, we trust your advice - you know that. Thanks for being with us.

MCEDWARDS : Richard, thanks so much.

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