When it was announced last night that U.S. forces had killed Osama bin Laden, there was jubilation. Joyful crowds poured into public spaces in New York City, Washington, D.C., and elsewhere, and cheers erupted in living rooms worldwide. The glee wasn't confined to the television-watching public. Stock markets around the globe have risen on the news, even though bin Laden's death had little to no direct impact on any economy.
The main reason for the jump is that bin Laden's death is seen as a concrete victory in the war on terror and a solid contribution to a safer world. In addition, it's a boost to many traders on Wall Street who survived the attacks of Sept. 11, 2001.
"It is an emotional trade for stocks," James Newman, head of U.S. government and agency trading in New York at Keefe, Bruyette & Woods Inc., told the Wall Street Journal. James Paulsen, chief investment strategist at Wells Capital Management, echoed the sentiment in USA Today: "It's bullish short term, both to celebrate … and also to reflect the likely long-run stability introduced by killing the head of this terror movement," he said.
In Europe, where markets opened earlier than in New York, investors also celebrated, but it was muted thanks to holidays in Britain, China, Hong Kong, Malaysia, Singapore and Thailand. Marketplace's Stephen Beard pointed out this morning that, in addition to rising stock prices, safe-haven precious metals such as gold and silver have fallen as investors seek out riskier, higher-return vehicles such as stocks. "And the hope is bin Laden's death will lead to less tension in the Middle East, so that's reduced the price of oil. And has also created a general feeling that this will help boost consumer confidence a bit in the United States. And that has helped lift the dollar," Beard said.