Global Business and the Terrorist Threat
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Global Business and the Terrorist Threat

Edited by Harry W. Richardson, Peter Gordon and James E. Moore II

Global business is affected by global terrorism and the two are intricately linked on many levels. This book is an eclectic and enlightening compendium of research that explores the interrelationships between the two. A companion to and expansion on the authors’ previous books on the area, Global Business and the Terrorist Threat takes a closer look at practical business management, as influenced by terrorist infrastructure, networks and actions.
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Chapter 7: Terrorism, News Flows and Stock Markets

Thomas Baumert


Thomas Baumert INTRODUCTION That day was not going to be just like any other. When at nine in the morning on 11 March 2004 the European stock markets began their sessions, they did it under the impact of the greatest terrorist attack ever perpetrated in the history of Spain. Scarcely one hour and 20 minutes previously, at 7.39, three rucksack bombs had exploded in a train entering Atocha station, Madrid. In quick succession, they were followed by four more bombs in a train in the Calle Téllez, another on a train that was stopping in Santa Eugenia Station, and two more exploded in a train which had stopped near the Pozo del Tío Raimundo. As the morning wore on, the news and pictures broadcast by the media recalled to investors’ minds the terrible memory of the 9/11 attacks and – to the extent that the turmoil would allow – they recalled the disastrous economic consequences of the latter for the financial sector. This perception was transformed immediately, both in the Spanish Stock Exchange and in other European bourses, into a clear predominance of sell orders, a trend which was to intensify as the real magnitude of the catastrophe became apparent, and this was maintained, albeit it in a more qualified manner, throughout the following day. During these two days, the stock market indexes reflected – perhaps better than any other indicator – the direct short-term costs estimated by financial agents and how the latter converted the news into economic information which could...

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