Airline stocks fell sharply on world markets Thursday morning after the revelation of an alleged passenger jet bomb plot in the U.K. sent shock waves through the travel industry.
But most markets recovered later in the day.
Shares of American Airlines parent AMR Corp. fell nearly 13 per cent in early trading on European exchanges, while the parents of United Airlines and British Airways fell more than four per cent.
But many of the world's markets recovered later in the day after the initial panic wore off. The price of oil continued to slide, taking the Toronto Stock Exchange with it, but Wall Street recovered on hopes that oil prices will keep going down.
"I think the market is starting to get used to these kinds of news events," Ian Filderman of Scotiabank Wealth Management told Canadian Press. "We're not seeing the kind of negative impact on equities that we saw, certainly after 9/11 and some of the other subsequent events to that as well."
The impact of the U.K. news affected a host of airlines and travel companies that were not involved in the alleged plot, as investors feared the alleged terror campaign would affect tourism in the midst of the summer vacation period.
Security officials said the alleged bomb plot targeted three American airlines — United, American and Continental. The security crackdown that followed the announcement of the plot caused chaos at airports around the world.
Air Canada's parent, Ace Aviation Holdings, fell sharply before closing up 86 cents to $27.90. WestJet fell 19 cents to $9.77 and airplane maker Bombardier Inc. was off two cents to $3.15.
Boeing, Air France-KLM, Lufthansa and the discount airlines easyJet and Ryanair were all swept up by the wave of selling.
AMR Corp. finished down 0.4 per cent, Continental down 1.3 per cent, British Airways fell 5.1 per cent and Lufthansa fell 3.3 per cent.
Oil prices also fell, by $2.35 a barrel to $74 US on the New York Mercantile Exchange on fears of a coming slump in travel, while investors surmised that a ban on hand luggage would hurt impulse buying at duty-free shops at the world's major airports.
Losses were severe in Toronto, where a sharp decline in the energy sector helped take the S&P/TSX composite points 49.1 points lower to 11,959.05 by the close. The TSX Venture Exchange dipped 16.93 points to 2,632.24.
The Canadian dollar tumbled by nearly half a cent to 88.79 cents US despite good news on the trade front. Statistics Canada reported earlier in the day that the merchandise trade surplus rose in June for the second consecutive month.
Wall Street also tumbled after the alleged bomb plot was announced, but recovered later in the day on news that oil prices had fallen. In New York, the Dow Jones industrial index closed up 48.19 points to 11,124.37. The Nasdaq rose 11.46 points to 2,071.74, while the S&P 500 index rose 5.86 points to 1,271.81.
Stocks tumble on alleged plot news
The news sent European stocks down across the board, with the FTSE 100 share index in London down 55.8 points to 5,804.7, Frankfurt's DAX 30 lost 96.26 points to 5,606.55, while the Paris CAC 40 declined 60.67 points to 4,964.48.
Japan's benchmark Nikkei 225 index fell 25.68 points, or 0.16 per cent, to finish at 15,630.91 points on the Tokyo Stock Exchange.
In Hong Kong, stocks fell as traders held off moves ahead of more corporate earnings announcements. The blue-chip Hang Seng Index fell 124.44 points, or 0.72 per cent, to 17,222.14.
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Airline stocks fell sharply on world markets Thursday morning after the revelation of an alleged passenger jet bomb plot in the U.K. sent shock waves through the travel industry.
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