tv Bloomberg Markets European Close Bloomberg March 22, 2016 12:00pm-1:01pm EDT
♪ mark: it is noon in new york, europe, 5:00 p.m. in brussels. they are on their highest terror alert after a bombing killed dozens of people and injured hundreds. in london, i am mark barton. this is a special edition of "bloomberg markets" -- terror in europe. scarlet: if you look at the reaction we have been seeing, you are seeing a shift into safe haven assets like gold and treasuries. it is not as extreme as you would have thought, waking up at 6:00 a.m. they do not seem to be reacting too much to the events that happened early this morning in the u.s. and 8:00 a.m. in belgium. let's go to mark barton for a
sum up with the european trade looks like. mark: travel and ledger have been the worst performing. these are all 19 industry groups. earlier today, all 19 were lower. 4 are higher. the indexes off of the lows, of 1%, leaving us to believe that stocks are proving resilient to terrorist attacks ,s they have been after 2011 london in 2005, and charlie hebdo of last year. this proves the travel and leisure index. this is when the charlie hebdo killings took place. we saw stocks rise and rally by 20%. in the paris killings in november we saw a decline that followed, but then the gauge hit a record high.
the stocks index rose 11% earlier. it is now up 3%. this is the fear index. it is nowhere near the high in august following the chinese valuation. the pound is falling. the currencies are rising against sterling, because the feeling is that this might give ammunitionpaigners as we come tour the referendum. let's go to our top stories. belgium is on their highest terror alert after three bombings in brussels. at least 31 are dead and 180 injured. the city is at a stand still as the police searched for more bombs. let's go to where ryan chilcote is near where one of the subway stations were hit. what do you see? you can see the subway station 150 meters behind me.
it is beyond these barricades. this is where many of the 31 people were killed in the two attacks that took place in brussels. you had one attack at the subway station. to put things into context geographically, we are in the , the of the european union european commission. we are surrounded by buildings that belong to the european commission. this is very much an acgtivtive police and rescue scene. they use this artery which is closed off to regular traffic. if you think about it, this is the first large-scale terror attack, the largest, that has taken place in this country since the second world war. at least one attack happened in the eu, thef european commission's headquarters. the other at the airport.
this is coming after the detention of one of the suspects in the paris attacks in november. state has claimed responsibility. that is according to an islamic state news agency. is there any sense of a manhunt underway? we saw in paris? sure there is. you don't see that on the streets. i would say that the environment is pretty permissive. we drove into the city and saw very little police presence. there are a lot of police where we are around the crime scene. not groups of men with weapons moving through the streets right now. nothing like that. in the centeralm of brussels. there is no traffic going down the street.
this is one of the main arteries that takes commuters. this is a rush-hour in brussels. there are no overt signs of a manhunt underway. you can be sure the belgium police with the international authorities are looking hard. they are concerned. we have seen two different locations hit. scarlet: thank you. ryan chilcote joining us from brussels. we'll check in on first word news with mark crumpton. mark: thank you. as you can imagine reaction has been swift. president obama and world leaders have condemned the violence. the president spoke from havana, cuba. pres. obama: another reminder the world must unite. we must be together, regardless of nationality, or race, or faith, in fighting against the scourge of terrorism.
we can and will defeat those who threaten the safety and security of people around the world. mark: the u.s. house of representatives will observe a moment of silence this afternoon . in italy, the eu commissioner says europe will remain resolute. the idea of european values will deal with terrorism, it will not get us down. are going to react from a legal, judiciary, police cooperation. terrorists go on and will be defeated. mark: the violence appeared to be courted native, similar to the attacks in paris. belgium has been on high alert since the weekend when they captured the man believed to be the only surviving this event from the terrorist attacks. global news, 24-hours a day, powered by our 2400 journalists around the world.
i am mark crumpton. brussels rocked by terrorist attacks that killed 31 and injured more than 180. the islamic state is claiming responsibility. perspective.et the former u.k. defense secretary under margaret thatcher joins us on the phone. sir malcolm, good afternoon. how troubling is it that the events that took place in brussels happened so soon after the paris terror attacks in november and the charlie hebdo inacks in november -- january of last year? in connectiont is with the last person the police were searching for. in belgium, there are a large number of terrorist sympathizers.
sadly, one has to a knowledge that it is not that difficult, if they turn out to be suicide bombers, if individuals are determined to blow themselves up, to take explosives into a public place. there are limits to what even the best security can do. massive publicity for the terrorists. isthe end of the day, i.s. no more powerful at the end of the day than they were at the beginning. alix: there were multiple locations. what does that tell you about the of the structure that had to be there for that to happen? have been: this might highly organized by the islamic state from some central headquarters, but it is more likely to have been the local i.s. people in brussels. there has to be courted nation between three individuals.
i don't obviously know, but it is three individuals who are islamic fanatics have access to explosives. if they each decide to go to a different public place in brussels to blow themselves up with as many people as they can kill, that does not require a sophisticated operation. it is not like crashing aircraft into the twin towers in new york on the had a massive amount of coordination. alix: as home base for the european union, brussels was on following the november attacks in paris. why does it say about the city being able to defend itself. it was prepared but could not spend off the attacks? sir malcom: we will have to wait to find out if the individuals that blew themselves up, the suicide bombers -- it is likely their identity will be discovered. we will need to know if they were already on the radar. were they known terrorists, or
were they unknown? if they were known terrorists, you can have people that were sympathetic to the organizations, even though they may not have carried out previous attacks. the scene is constantly changing. in an open society like our own, throughout europe and the united states, you cannot protect every public place. when it is rather a crude form of attack of someone blowing themselves up. it is harsh to say, but that is something that we have to appreciate. you cannot expect intelligence agencies or security forces to work miracles. coming back to, and i make no apology, is still it produces publicity, publicity is not the objective. they want to realize political objectives.
to realizingearer them. we have seen throughout europe, africa, and asia, the 99% of people that are not terrorists do not give in. they're often affected by it, but they do not change their fundamental hostility to terrorist organizations because they blow up innocent people. mark: eurasia says there is a growing perception the eu is failing on terrorism and security. that it could swing the outcome of the referendum on june 23. i'm not sure that you have seen the reaction in the currency markets, but we have the pound falling against all 16 of its peers. we have a spokesman linking the rules, to free movement lack of border controls. prime minister cameron says that is not appropriate. whether or not it is true, is there a risk, if you are pro-eu, which you are, that the
toctorate will link that terrorism, immigration, and vote to leave the eu? always be: general silly people who say silly things. sometimes the public is not in a position to be certain of what they are claiming or suggesting is true or untrue. not peculiar to european countries. the worst terror attack was in 2005 in london as a result of similar attacks on our .nderground and london buses the idea that you are protected from terrorism more effectively by not being in the european union is absurd. if anything, it is the other way around. is everyave not seen year, closer cooperation between intelligence agencies in the
united kingdom and continental countries. that can be done if you are not in the european union, but it is easier to do it as part of a similar organization which we have had interpol meaning terror suspects in one european union country can be extradited to the country they are due to stand trial in. we've had people extradited from eu countries to london to stand trial who would not have been able to be extradited except for our relationship with the european union. eitheruments can be used way, but i think it ought to be remotely irrelevant to the brexit referendum. mark: the former u.k. defense secretary under margaret thatcher joining us from london on the phone. more on the situation in brussels. how the markets are reacting on this addition of the european
♪ mark: i am mark barton. you are watching the "european close." story, 31 people have been killed and more than 180 injured in the three explosions that rocked brussels. .et's go to brussels' carolyn give us an update on what has been happening in the past hour, including the news that the islamic state has taken responsibility for today's explosion. caroline: that's right. that is what we heard from the
twitter account. is claimingstate the attacks in brussels. no surprise given that it was coordinated attacks. you had two explosions first at airport, the international airport in brussels. the otheryou had explosion that killed more than metrople in the maelbeek , justn, not far from me behind the european institutions at rush hour at the heart of europe. intel, theo terrorists were wearing explosive belts and devices. we heard earlier from the belgian authorities that there was at least one streetside attack at the airport. the investigation is underway.
that a 15rd minute drive from here north of the europe ian corder of brussels is canceled between here and the zaventem airport. mark: angela merkel is speaking in berlin. she has voiced deep sadness about the terror attack. she has said that the morning is is matchedmourning by the determination to stop terror and that germany is offering full cooperation with belgian. -- with belgium. the charlie hebdo killings, then in november for the paris attacks, it leads to the question, how was this allowed to happen when so much attention was on brussels after the terror attacks in november
in paris? of course, the securities have been installed in paris and in belgium. it is hard to believe, as you mentioned, since the deadly attacks in paris -- it is a global cooperation with voices from all over europe saying we need to show unity in the fight against isis. the italian prime minister saying earlier that this is a global threat. these are local killers. thatof the terrorists committed the killings in paris in november actually passed through brussels at some point in their life. some officials also including the foreign minister in belgium
were saying that we don't know if some men are still at large and where they could be -- and if there could be more attacks after this one. mark: thank you. caroline in brussels. still ahead, we will continue monitoring the situation in brussels and how global markets are reacting as we had tw -- head toward the "european close." ♪
let's go to alex to see what is happening in the oil market. prices are fluctuating following the explosion in brussels. they're coming off of their 12-year lows. is the worst over for oil? jack, it is such a pleasure to see you. you think that oil has bottomed? we see as we look at it from a long-term perspective. have had down- we times, but we believe long-term prospects are bright in the united states. we have the opportunity to import.rude and to we see the longer-term one of the great opportunities is in this country. the: if you look at bloomberg i have charted, the forward curve of oil now versus where we were in february 11, where we hit the bottom, it has significantly.
what are producers doing differently now than they did mosteeks ago? jack: recently, we have stabilized. added.e rig count was we're still down 50% over where we were year ago. everyone is watching the market conditions. the capex budgets have been pulled back. everyone is watching closely and looking at the global demand. up more? that tick arehe longer-term, people trying to make that calculus. one thing that is important to remind ourselves, this is driven by fundamentals -- the law of supply and demand. the and nine in states is major player and producer. public policy changes like lifting the crude oil export ban has allowed us to play more
in the global marketplace. there are opportunities that the market will drive for we will go going forward. the: oil exports out of u.s. is nowhere near where we saw in december because oil prices have the oil less competitive. how do you see that playing out? changesthink the policy are very good from a longer-term perspective. you know the epicenter of energy powers is moving into the united states and having a ripple effect across the world is everyone sees the u.s. as a major player. a week ago, the ambassador from the czech republic came to our board meeting and told about building relationships with u.s. producers in oil and natural gas. to bring it into europe and around the world. we see those as positive developments, and longer-term we are well-positioned. we have to get out of the current job cycle and back to the benefits.
we are seeing low gasoline prices and low prices from natural gas. it is a win-win. the president and ceo of the american petroleum institute. there has been a flight to safety across the asset space in europe. stocks have fallen. they're not as low as they were earlier in the session. at one juncture it was down by 1.6%. we have a rising london and german market. all of the latest market movements after the break. this is the "european close." ♪
european close. i am mark harton with scarlet fu and alix steel. we will take you to brussels in just a moment. we will bring you the latest of what we know minute by minute. first, i want to show you how european markets have fared today. this is the stoxx 600. initially, we saw a decline of 1.6%. thatems to prove the point investors are resilient in the face of terrorist attacks, as madrid,e with 9/11, 2004, london 2005, and paris both at the beginning of last year and the end of last year. the stoxx 600 down one quarter. this proves the point the industry groups like travel and leisure, which are initially hurt by the impact of terror , they do eventually
make up for the losses. after the charlie he do attack, we saw a loss of about 20%. at the end of the year. this is the pound against all of its major peers today. we will talk about this in a moment. you would have thought the euro would have the biggest impact from the terror incidents in brussels today. oh, no, it is sterling. every single major. every single major peer against sterling is rising. the pound is falling. all of these currencies are rising against sterling. it is a flight to safety. ,his is the german version spreading the difference in deal between the two countries. today, the money has moved into
the core, more than the periphery. yes, yields are falling in both countries, but the difference is widening. that is the spread over the last six months. the yield differential, 1.22%, highlighting the flight to safety on the day like today, a trend we have seen again and again, specifically in the last year. alix: good stuff. we turn our focus now to currencies. mark was just talking about the pound. all of that on speculations that the brussels explosions will brexit.curve for a mark b.: joining us now with it is a great sadness. be will come to sterling.
we almost have to retread what we went through in november in paris and january in paris. >> it feels like it is a repetition. we had the tragic events in to increasinged support for the outvoted, if you look at the polls. we saw a favor in the leave vote. that was reflected in a sustained selloff of the pound against the euro. a repetition of that seems likely, at least in the near term. that said, some of the negatives are already in the price. significante a change in the polls, the pound downsized. scarlet: with geopolitical risks increasing, what was this due to the quiddity and positioning? mark b.: what will this do to positioning liquidity with
geopolitical risk increasing? be eroded,lihood to as a layer of geopolitical risk and uncertainty to the overall outlook, which is inherently negative, putting on sizable bets. guess -- on the day, your previous remark about why the euro is not underperforming as much as the pound, that goes precisely to that, the lack of confidence, the lack of paid toy, being trade money. you need certain bets. happening, of this and we have a precedent, with
the paris bombing, the pound could be the underperformer on the day, with the near-term. a sterlingay out as negative event because of the lack of confidence in the market. alix: you mentioned a euro negative event, but it has traded in the past as a more of a safe haven asset, along with the yen. >> it is the case that the euro aboutle to benefit from of risk aversion. however, that is mainly driven by investors unwinding their positions in the eurozone equity markets, which were then accompanied by short hedges. it is a fairly mechanical relationship which depends on the extent of markets, and foreign investor investment in the stock market. that involvement has been eroding as of late.
foreign investors are discouraged by the lack of growth and prospects there. if anything, they again, the japanese yen, remains the safe .aven currency of choice scarlet: i'm glad you bring up the japanese yen remaining the safe haven of choice. bc it strengthen, it even as volatility eases significantly since february 11. why is that? they seem to move in lockstep. that is not happening right now. >> these are well-established correlations that investors like to look at at times like this. along the want to be currency with risk aversion historically. that, at the moment is the
japanese yen. what is supporting get on the hole with bouts of risk on, risk off, is the fact that we are still moving closer to the end of the japanese fiscal year, associated with strong flows hedginge currency -- flows by japanese corporate. that support for the yen should come to an end before long. if anything, the risk aversion on the back of geopolitical risk does prove to be temporary. long-term, it should be on the downside. the flow data, it is suggesting the japanese investors are using the strong again at the moment -- the strong yen at the moment. mark b.: thanks for joining us today. how is it looking over their? we are close for the day. arelet: u.s. stocks
bouncing around the unchanged line for the moment. we have some airlines falling in the wake of the brussel attacks. it is, after all, a holiday shortened week. more abigail doolittle has life from the nasdaq, where she is looking at airport stocks. abigail: not so surprisingly, seven out of the top 10 worst percentage performance in the nasdaq performers are travel related. this includes priceline, marriott, american airlines. the worst of all is priceline. interestingly, if we go back over the last six month, they are still ahead of the levels ahead of the paris terror attacks. lots of volatility. to bounce backnd
quickly from these tragic events, but over the long term, it could be how is this company going to deal with an entry into asia? how will they deal with airbnb as competition chec? alix: thanks so much. scarlet: let's check in now with first world news with mark crumpton at the news desk. mark c.: reports say that islamic state is claiming responsibility for the three bombings in brussels today. at least 31 people are dead. more than 180 others were injured. belgium is on the highest terror alert in its history. muscles with is in the latest. good evening. mark. good evening, let me give you a lay of the land. over my left shoulder, you see,
200 meters down the road, a subway station. this is right in the heart of brussels. the road behind me is closed to all but search, rescue, and police vehicles. there are absolutely no commuters using this road, which is really an artery into the center of brussels. this normally would be rush-hour, and this road would be full of cars. just over my right shoulder is a piece -- what you can see, a building thatikes buildi belongs to the european union. it just so happens this is where finance ministers and economy ministers of the 28 eu countries gather quite regularly. the subway station, where the second of the two attacks took lace here, after the first really at the airport -- hard to see other than a strike
directly at the european union. many the people coming out of the subway station would have been on their way to the european commission buildings that surround me on all sides right here. also important to note that this is really the first world's largest terror attack since the second world war. this is a city that really has almost no experience with terrorist attacks. there certainly has been the threat of terrorist attacks, when we had the terror attacks in paris, there was a security operation with the last remaining suspect in the paris attacks was rounded up right here in brussels. people were concerned about terrorism, but the actual event of terrorism, something like 31ay, in which at least people killed, 180 injured, this is something entirely new to the city. the european union -- and to the european union officials that work in it. mark c.: we have heard concerns
expressed by some european officials and those in brussels about what someone was describing as a spectacular tear event. they had a sense, after the raids of last week, and the rate of a few days ago when the man who police believe is the mastermind of the paris attacks was taken into custody, are we seeing a link there? between the arrest, and what we saw today? we are not hearing officials make that link just yet. you can be sure they will be thinking about that. i was here on friday, when the last suspect, you are just talking about, was apprehended. it was almost a joyous scene. wente cannot believe it down without casualties, other than the suspect himself being
injured. they could not believe there were reprisal attacks, and now you have these attacks here on monday. no one is saying that just yet, but there are concerns, and i have always been could turns, that there would be reprisal attacks. that may be what we have. about 30we have seconds left. i have to ask you about the climate in the city. a lot of people were saying, at the airport today, there was a , even in the face of those bombings. what are you sensing in the streets of brussels right now? ryan: where i am right now, it is locked down. there are very few pedestrians moving around. by large, and i have moved through the city, it looks like this as usual here in brussels, outside of the immediate scene outside of this one terrorist attack, as well as the airport. mark c.: thank you so much. we appreciate it. global news 24 hours a day, powered by are 2400 journalists in more than 150 news bureaus
terrorist attacks rocked brussels this morning, leaving 31 people dead. let's look at the impact this is having on the market. in a head ofng investment in geneva. $9 billion.ome it is remarkable how resilient investors have been today. the stoxx 600 falling in the inse but stocks rising paris, germany, and many other markets, proving once again, the resilience of investors in the face of terrorism. >> yes. stocks have been quite resilient. of course, you don't shut down a whole continent because of a terrorist attack, even though they are dramatic. it should not come as a surprise that you have some knee-jerk reactions. you have to concentrate on the
fundamentals. the whole market should not be affected that much. scarlet: resilience, guess because we came back from steep losses early on, but if you look at the stoxx 600 over the last 5-6 days, you are basically unchanged. whether signs that the rally was running out of steam even before today? >> i did not get the question. signs thatre there the rally was running out of steam even before today? say ifs difficult to stocks were running out of steam. some financial people reconsidered the positions. away fromem moving sectors that could be affected by the events of today like airlines or hotels.
stocks went up on the security side, of course. the european market is a poor performer this year. veryarkets as a whole is cheap. it is difficult to say if the markets have run out of steam before that. the market should be quite resilient, given the situation, and the interest rate as well, which is important. one cannot say that the market should have corrected anyway. isx: one thing we have seen volatility has not moved that much. the stock index is not nearly the level we saw in november, august, or the february high. what is your expectation for volatility going forward? >> with this type of event, you can expect volatility to remain at high levels. that is a possibility. the again, it depends on
following events. should we have other threats or materializing, that would be a cause for increased volatility. not only reactld to these kinds of events. with the interest rates, where china, you should to risehe volatility afterfrom current levels, quite a good rally over the last few weeks or so. mark b.: what about the earnings factor? we have seen the stoxx 600 rebound. backdropearnings justify further gains in european stocks? the market is really
different when you go into a sector of specific stocks. recovery.expect some material and energy expectations are very low, so hopefully we stabilize from here. for the rest of the market, the overdriver of the market the last 2-3 years, which were the level ofocks -- fear is very high. i would be more cautious on the energy sector going forward. ok, though earnings can be expectations are high. it depends on what is happening
now, once again, on the fear factor. i would say we may get some good surprises on financial, and eventually, materials. on the contrary, i would be cautious. mark b.: when you look at the march of last year, starting to buy bonds, december, easing -- stocks are actually lower. is qb good for ent equities? >> it has quite an important impact in europe. the problem is my drug of orange that the markets -- mario draghi arkets.about the
we saw most of the losses earlier in the session. the stock 600 was down as much as 1.6%, led by travel and leisure stocks, but look at the cutback on others as well. .hree indices rising it proves that an national selloff after terrorist attacks have always been arrayed days or weeks later. flightto finish with the to safety, bonds are rising, heel sup been falling, sterling has fallen against all of its today, as has the euro. bloomberg markets continues after the break. ♪
explosions.after the u.s. announcing it will add security personnel to we bring you live reports from brussels while keep on financial markets, which remain resilient. stocks are mostly flat, in the aftermath of a treasuries and gold advance. david: -- scarlet: let's check in with julie hyman. julie: we've seen stocks in the u.s. proved resilient and then some. early we saw a mixed to little changed picture, now, still relatively little change, but more to the upside. with the nasdaq in particular leading gains today up .4%. inve seen mark barton show past instances when there have been various terrorist attacks, the european leisure stocks, in particular, have been resilient. we are seeing that more broadly occur today el