Brussels under terrorist attack: equities drop and gold higher

Both equity markets and the euro are lower on Tuesday after what appears to be a coordinated terrorist attack in Brussels. Belgium is now on its highest terror alert after multiple explosions in the airport and metro stations of its capital.

The latest incident in Belgium comes the day after one of the attackers from Paris was shot and arrested in Belgium. The Paris attacker was believed to be planning another attack in Belgium so if he was behind today’s attack, it will leave big questions over the effectiveness of Belgian and EU-wide counter-terrorism organisations.

Terrorist incidents are becoming more frequent in Europe, which is a travesty for those directly affected, but also makes investing in the content that much less attractive.

Currency markets were quickest to react with the Belgium attacks weighing on the euro whilst the Japanese yen received haven bids. The British pound has fallen more than the euro on heightened Brexit risk. Britons may feel safer outside of an EU which is starting to become a hotbed of terrorist activity. A smaller than expected rise in UK consumer price inflation added to Sterling weakness.

The price of gold leaped over 1% amid the attacks, but later came off its highs.

The explosions are bad news for airlines which have just started to see passenger demand pick up again after a slump in the wake of multiple terrorist incidents at the end of last year, including the attack on Paris. The response from authorities is likely to be another extension of security controls which make travel even less attractive for tourists.

Comment by Jasper Lawler (Market Analyst, CMC Markets)