Friday, August 11, 2006

Terror plot hits stocks and duty-free sales

The news of the British terror plot has had an impact across currency, commodity and equity markets overnight. CNN has reported that liquor sales are down at duty-free stores at airports and stocks across the board are down. Sales of alcohol, perfume and other items at airport duty-free shops fell immediately yesterday as passengers stopped buying those items in response to new government restrictions on liquids, gels and creams in carry-on baggage. Experts predict that airport retail shops will continue to suffer in light of yesterday's terror scare that forced passengers to dump their beverages, toothpaste and shampoo before boarding planes. But they expect food vendors and others to benefit from passengers who will face longer airport waits for flights because of the new security measures and have more time to spend money. “But if people become more reluctant to fly, as they did after the Sept. 11, 2001, attacks, food vendors and others would suffer,” said Bob Goldin, executive vice president of Technomic Inc., a food industry consulting and research firm based in Chicago [Baltimore Sun]. Retailers have much to worry about. Shops and airports generate 25%, or $122.1 million, of Los Angeles Airport revenue; more than 40% of that from food, beverage and duty-free sales. The negative outlook for the aviation industry has helped send oil prices lower, while hurting airline and tourism stocks on European and American share markets. The operators of trans-Atlantic flights such as United and American Airlines have been worst-affected. Bloomberg reported that other major carriers were also affected including Air China and Nippon Airways. "The security threat has escalated since Sept. 11," said Masayuki Kubota, who oversees $2.1 billion at Daiwa SB Investments Ltd. in Tokyo. "The concern for investors is how are economic growth and corporate earnings going to be affected by instability internationally."
The pound sterling and euro have also fallen sharply in value as did the gold price which fell to $US635.18 an ounce. In London, shares in British Airways nosedived more than 5 per cent and the hotel chain, InterContinental, was down more than 3 per cent. At one stage, the FT-100 index was more than 100 points lower. But 24 hours after the terror plot was made public stocks most affected by the news stabilised this morning and have rebounded to post some of the market's largest gains [Daily Telegraph].
Even Oliver Stone’s film World Trade Center could see box office sales drop []. With news of a terrorist plot to blow up in-flight passenger planes, executives at Paramount Pictures considered scaling back advertising for the new Oliver Stone film, World Trade Center, which opened Wednesday this week. Stone's film recounts the harrowing tale of two Port Authority police officers caught under the rubble of the twin towers, which fell after being hit by two planes on Sept. 11, 2001. The film earned $4.4 million at the box office Wednesday, exceeding Paramount's expectations. "The events of yesterday and today make this story even more poignant," Don Harris, executive vice president of distribution at Paramount, a unit of Viacom Inc., said Thursday. "But I don't know whether it helps or hurts." Posted by Picasa

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