Hurricane Sandy, which hammered New York again on Tuesday, has had an economic impact well beyond its already impressive physical size, with European stock and oil markets, airlines and insurance companies all affected by the storm. "When New York is closed, there is roughly 40 percent less volume in Paris," said stock trader Yves Marcais at Global Equities.
"The real engine is still Wall Street," he added as trading in New York was suspended for a second day, marking the first time traders have been told to stay away since the September 11, 2001 terror attacks. On Monday, trading volume in Frankfurt amounted to less than 2.0 billion euros ($2.6 billion), almost half the average recorded by the German financial capital last week.
In Paris, trading of barely one billion euros on Monday approached an all-time low set in late December 2011. On Tuesday, European markets picked up a bit, with ETX Capital analyst Ishaq Siddiqi putting it down to strong corporate earnings, "and the fact that the worse of Sandy''s disaster in New York City is over with Wall Street likely to resume trade, albeit limited, by Wednesday."
He added that "the devastation is a huge concern for stocks and sectors exposed heavily to transport, logistics, industrial and insurance." On oil markets, prices rose slightly as traders assessed the impact that Sandy would have on demand for crude oil in the United States. "With so much uncertainty around, the markets did not need another dangerous curveball," noted PVM brokers analyst David Hufton.
Sandy hit the US East Coast as a category 1 hurricane, but scientists pointed to particularly low atmospheric pressure near its centre, a key measure of a storm''s strength, and President Obama declared a "major disaster" in New York, parts of which were expected to be without electricity for several days. At least 16 people were killed in the United States and Canada as the storm roared ashore late Monday, and 8.1 million homes and businesses were without power on Tuesday.
Hurricane-force winds extended as far as 175 miles (280 kilometres) from Sandy''s centre, but the economic impact was being felt even further away, as Swiss insurance company analysts were estimating how much of the damage they might have to cover. Those at Zurich Cantonal Bank (ZKB) have calculated that the world''s second-biggest reinsurance company, Swiss Re, could face claims totalling several billion dollars, possibly even more than those incurred from Hurricane Katrina in 2005.
In the US, disaster estimator Eqecat has said that US damage from Sandy''s wrath could hit as much as $20 billion. Meanwhile, more than 16,000 flights have been cancelled since the storm first began smashing the eastern United States on Sunday, and regular schedules were not expected to resume before Thursday at the earliest.
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