Terrorism Is Tragic But Markets Are Resilient

Life goes on at London's Borough Market weeks after the terror attack there. Photo by Elisabeth Dellinger.

Last Thursday, 13 people were killed and more than 100 injured as terrorists struck in Barcelona and Cambrils, Spain. The violence continued Friday as reports confirmed two dead and several more hurt in a stabbing in Turku, Finland. In the grand scheme of things, the loss of life overshadows anything investment-related. Now is the time for the living to pay respects to the deceased, count their blessings and remain vigilant against future attacks. For investors, though, remember that terrorism's historical impact on capital markets is small-terrorists are unlikely to deter markets for long.

We are sure you are as tired of reading these types of articles as we are of writing them. Unfortunately, the list of recent terrorist-related incidents runs long.

• 2016 ended with a truck killing a dozen people at a German Christmas market.
• The new year started with a horrendous attack at a Turkish nightclub.
• The UK suffered three attacks before the first week of June ended.
• France has been hit by numerous acts of terrorist violence over the past couple years-this year, there was a knife attack at the Louvre and a shooting before the presidential election
• Just last weekend in Charlottesville, Virginia, a neo-Nazi domestic terrorist sped into a crowd of people, killing one and injuring many others.
• Thirty-seven people died in a casino attack in the Philippines in June
• Not to mention scores of violent attacks in more volatile regions like the Middle East

That is a long-and sad-list to type. But markets haven't reacted with material negativity. Yes, stocks fell coincident with the news of the Spanish attacks-a sentiment-driven short-term reaction. But a longer view shows global stocks have bucked the serial violence and risen 12.0% YTD.^[i] We anticipate that, to whatever extent Spain and Finland impacted Thursday and Friday trading, the effect will prove similarly fleeting.

Consider how UK stocks-up 11.2% YTD-have fared despite several attacks on its soil. (Exhibit 1)

Exhibit 1: UK Stocks Carry On