New York crash highlights market fragility

World markets remain nervous Keystone Archive

The crash of an American Airlines Airbus into a residential area of New York on Monday illustrated the continuing vulnerability of markets across the world, including those in Switzerland.

The blue-chip Swiss market index had been trading relatively flat during the week’s opening session but shed more than two per cent shortly after the airliner went down. It eventually closed down 1.8 per cent to 6229.1.

Some of the hardest hit stocks were those of insurance companies, already expecting big claims because of the September 11 attacks. Zurich Insurance fell 4.6 per cent on Monday to SFr397 on fears about renewed claims while Swiss Re shed 3.5 per cent.

The technology group, Kudelski, and the luxury goods company, Richemont also suffered losses.

Crossair steady

But shares in the airline, Crossair, actually held steady.

New York’s Dow Jones Industrial Average clawed back losses during Monday’s session to close just half a per cent down as the FBI said it had no evidence the airliner had fallen victim to a terrorist attack. The Dow Jones actually managed last week to reach pre-September 11 levels.

In London, the FTSE 100 was off nearly two per cent, Frankfurt’s DAX fell 2.2 per cent and the CAC 40 in Paris was down three per cent.

Unsurprisingly, the airline industry again bore the brunt of the selling mood.

American Airlines itself fell 12 per cent, with United Airlines parent, UAL off six per cent, Delta down ten per cent and Continental Airlines down 9 per cent.

In Europe, British Airways and Lufthansa led the decliners.

Global insurance companies were also hit as brokers said the loss of the flight was likely to trigger the industry’s largest-ever claim apart from the attack on the World Trade Centre.

Analysts says if Monday’s crash turns out to be an accident, the resulting fall-out on the stock markets is likely to be limited to airline, insurance and travel companies.

But whatever the cause of the crash, they say it shows the continuing vulnerability of the financial markets.

swissinfo with agencies