Markets remain nervous in the City
In the City, experts said that, after its initial fall, the market would now pause for breath and see how the military action unfolded.
Hilary Cook, director of investment strategy at Barclays Stockbrokers, said: ‘‘The fall is clearly a reaction to the news and concern about what happens next.
Although markets have been expecting some sort of retaliation, when it actually starts people say - gosh, what is going to happen next?
‘‘However the fall follows a very strong run. We are feeling more confident about markets now and are using today as a buying opportunity but there is clearly a lot of uncertainty.
‘‘Shares in airlines and hotels are falling and of course Railtrack hasn’t helped the UK sentiment.’’
Mike Lenhoff, portfolio strategist at fund manager Gerrard, said: ‘‘There is an obvious concern now military intervention is under way, but it is early days and nobody knows how it will evolve.
‘If it is localised and confined to Afghanistan, I think markets will take it in their stride but if it spreads there is a serious problem - it will be actual economies affected not just confidence. The airline industry will suffer even further, people will spend their time glued to their TV screens not in the shops, and company earnings estimates will be revised down dramatically.
‘‘I don’t think the market is going to sally forth with any enthusiasm, it wants to see what happens in terms of tactics and strategies.
‘‘Leaving that aside, the oversold position has now been unwound - the market is not oversold any more so there’s no reason to go further up.
‘‘Now the market will pause for breath and take stock of the position.’’
Outside London, other European markets were also suffering, with France’s CAC 40 and Germany’s Dax slumping.
Traders said they were now awaiting the US opening at 2.30pm BST, to gauge America’s reaction to the military action.
By midday, sterling was weaker at 1.4734 US dollars.
