US stock markets will remain idle today, leaving the world's largest equity exchanges paralysed for a third straight day after unprecedented air attacks toppled the World Trade Centre in the heart of New York City's financial district.
Many financial professionals took the day off and may take another, after New York Stock Exchange chairman, Mr Richard Grasso, said equity markets will begin trading as early as tomorrow, but no later than Monday.
"It is clearly the goal to bring this market up as quickly as humanly possible," Mr Grasso said at a New York press briefing. Trading in US government debt, by contrast, will resume today at noon, Irish time.
On resumption of trading, share prices are expected to fall sharply as investors respond to the potential effects of the atrocity on the American economy.
European financial markets were in virtual paralysis yesterday after the terrorist attacks which closed Wall Street for a second day.
Activity slowed to a trickle as investors began the daunting task of assessing the implications of the attacks on the World Trade Centre that left thousands dead and destroyed both landmark towers which housed offices of many banks and financial institutions.
"The market's gone completely passive," said one senior equity broker at the London headquarters of a leading US investment bank.
"Much of what's being done is people closing down positions if they can do it with the original person it was set up with, so as not to multiply counterparty risk. Otherwise there's very little business going on," he said.
There was no dealing in US shares on Europe's stock markets.
Abnormally high activity in insurance and airline stocks - the sectors most affected by the terrorist attacks, offset by unusually low trade in all other sectors, meant overall volumes in equity markets looked to be holding up relatively well.
However, as benchmark equity indices moved erratically, investors and brokers limited their trades to bare essentials.
The Eurotop Index of 300 leading shares added 0.8 percent after a see-saw morning session, and following a fall of more than six percent on Tuesday.
Britain's FTSE 100, which fell 5.7 per cent in its worst slide since the 1987 crash, regained about half of Tuesday's losses.
The Irish market, however, lost another 2.5 per cent with airline stocks like Ryanair and tourism stocks like Jurys and Gresham suffering the most.
Also on the Irish market, many of the international funds listed in Dublin had trading suspended because with New York closed, calculations of the funds' net asset values was suspended indefinitely. In common with other European markets, the Irish stock market asked member firms to observe a minute's silence at 1.45pm as a mark of respect.
On European markets, dealers said that without liquidity, with no guidance from Wall Street and with deep uncertainty over ramifications of the devastating events in the US, markets were unlikely to return to normality for several days at the very least. The Friday publication of key US economic data, which was expected to set the tone for trading in the week ahead, has been postponed.
"We had the knee-jerk reaction yesterday and now we are scrambling around with no price visibility and no feel for what's going to happen when the US opens for business," said the head of equity derivatives at one brokerage.
One of the few research documents produced in London yesterday came from Goldman Sachs, which warned that Tuesday's events had turned its European strategy "on its head". The bank said that Tuesday's events are likely to deepen the European economic downturn.
(Additional reporting: Reuters)
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