There was little market reaction to the death of Osama bin Laden and there is not likely to be one. European markets were barely higher after the news. France’s CAC 40 was up only .3%. In Asia, the Shanghai Composite closed up, but the Hang Seng was off .36%.
US futures may rally and the markets here could move higher at the open, but the improvement will be short-lived.
bin Laden may have been a perfect symbolic target for the West, but media reports say he was no longer the tremendous force in al Qaeda that he was ten years ago.
The stock market was not hurt when bin Laden’s whereabouts remained a mystery. Of course, that may change if al Qaeda starts a new round of attacks to avenge the death of its spiritual leader. bin Laden was buried a sea so that his grave could not become a shrine. His followers, however, do not need a body in the ground to fuel their anti-American rage. It may not come immediately, but that does not mean it will not come. There are concerns that Middle East political unrest could help resurrect al Qaeda’s influence. That, in combination with bin Laden’s death, is reason enough for worry.
Investors seem to have seen within a few hours that there is really nothing to celebrate in terms of a potential lessening of terrorism activity or the spread of dissent in the Middle East and northern Africa. Those movements are already well underway and continue to spread.
The US government has already expressed concern about the fallout of the bin Laden incident. According to CNN, “Given the uncertainty and volatility of the current situation, U.S. citizens in areas where recent events could cause anti-American violence are strongly urged to limit their travel outside of their homes and hotels and avoid mass gatherings and demonstrations,” the State Department said in a worldwide travel warning issued early Monday. “U.S. citizens should stay current with media coverage of local events and be aware of their surroundings at all times.”
The irony of bin Laden’s demise is that it could cause US markets to sell off as an act of caution. Good news is supposed to travel fast. For the financial markets, the news about bin Laden is not good.
Douglas A. McIntyre
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