Around 130 people were killed and hundreds others injured on Friday evening in Paris, in what is France’s most devastating terror attack ever. Three teams of attackers carried out seven separate attacks in the country’s national capital. This included an attack on France’s national sports stadium.

Short-Term Impact Likely

However, in this one instance, casualties were limited due to quick and effective action. The maximum number of deaths took place during an attack on the Bataclan theater. President François Hollande blamed the Islamic State (ISIS) for the attacks, vowing to take strict action.

Global markets and France’s stocks in particular are expected to suffer to a certain extent as a fallout of this incident. However, market watchers believe that the effect will be short-term in nature and limited to those sectors which are sensitive to such incidents.

This is in keeping with the theme that the duration of impact of terror attacks on markets becomes increasingly shorter as the number of such incidents increases.

Europe’s Indexes Show Resilience

Global stocks are expected to take a hit following the incident, but have shown resilience as of now. France’s benchmark CAC 40 lost 1.2% at the start of trading. Germany’s DAX and Britain’s FTSE 100 had also started the day around 0.9% and 0.2% lower.

However, the CAC 40 was only 0.1% lower at 12:17 PM GMT. It even gained 0.3% for a short period. Both the DAX and the FTSE 100 gained 0.2% around 11:29 GMT and 12:15 PM GMT.

The Stoxx Europe 600 Index gained 0.1% and increased nearly 0.5% at one point. The index managed to erase a decline of 0.8%, following a rally from energy and mining shares.

Tourism, Luxury Stocks Decline

Tourism, airline and luxury stocks bore the brunt of the negative impact. Among the French companies to suffer was hotel group Accor SA, which lost 5.4% at one point. Other travel related companies also took a hit with shares of Air France-KLM Group declining 5.7% and Aeroports de Paris dropping 4.9%.

Luxury goods companies such as Kering SA, which had to close stores of brands like Gucci, lost 1.1%. Shares of LVMH Moet Hennessy Louis Vuitton SE declined 1.2%. But the impact was limited with companies such as Premier Oil Plc losing because of internal developments. Meanwhile, ArcelorMittal SA (MT - Analyst Report) and TOTAL S.A. (TOT - Analyst Report) moved upward.

GDP Growth Likely, ECB Action Expected

The decline in travel and tourism related stocks may have a short-term impact on the country’s economic growth. This is because this sector contributes nearly 7.5% of the country’s GDP. Incidentally, France’s GDP increased 0.3% in the third quarter compared with the second.

This is in keeping with expectations that the country’s economy is likely to record its best performance on the growth front this year since the beginning of Hollande’s term in 2012. However, this is still a modest pace and the euro is also likely to fall. This means that ECB President Mario Draghi is likely to honor his statements about expanding the ECB’s bond purchase program.

France ADRs Still Attractive

The iShares MSCI France ETF (EWQ - ETF report) had moved lower earlier in the trading day. This comes as no surprise as its top 10 holdings include LVMH Moet Hennessy Louis Vuitton SE, which has a weightage of 4.09%.

However, stocks of other companies based in France remain attractive bets. This ranges from operators in the oil industry such as TOTAL S.A., semiconductor solutions such as Sequans Communications S.A. (SQNS - Snapshot Report), both with a Zacks Rank #2 (Buy) and medical devices firms such as EDAP TMS SA (EDAP -Snapshot Report), which has a Zacks Rank #1 (Strong Buy).

In Conclusion

The impact of the attacks on stocks from certain sectors in France has been quite significant. However, the incident is unlikely to have a major impact on the economy and corporate sector as a whole in the long term. France is already showing signs of resurgence and is likely to make further gains in the days ahead.

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