Reasons why stocks didn’t drop after Brussels attacks
After the news of explosions in Brussel on Tuesday, stocks were down at the open, but railed during most of the day.
Why stocks railed despite this tragedy can be explain through what is called: Underlying Bid. Which means buying whenever price slip as a way of lurking underneath current prices.
At the end of Tuesday, stocks who related to travel and leisure were affected the most and it is common sense, as people likely will be less touring or shopping outside. The rest of the market wasn’t affected, because this poor reality of terror attacks all over the world, became a thing we expect to happen.
We do expect stocks from other sectors to be affected as well during the next couple of days, but not for long period. When tragedies occur, the pattern of roving bear market can reappear. Like it happened this year with banks stock who were taken down and drop other sectors, or when China economic reports showed a decline in annual growth.
The last bear market which still exist now, is the health care group. This sector is not yet clear, bur selling pressure seems to be decreasing. Big pharma and fast growing Biotech stocks have reached levels that seem too low for sellers.