vostok
Well-Known Member
At least 59 people were killed in Las Vegas at the Route 91 Harvest Festival on Sunday (local time). Soon after, shares in companies that make guns rose sharply on the news.
So is this normal? The ABC's senior business correspondent Peter Ryan spoke to The World Today to explain.
So, is it really happening?
Yes.
"So often we talk about geopolitical events in terms of market sentiment — things like terror attacks,
the US stand-off with North Korea," Ryan said.
"But local events like Las Vegas are being studied all the time in the United States.
"For example, a stock trading algorithm bought for the financial data company Thompson Reuters
has looked at 12 mass shooting over the past decade, starting with the Virginia Tech massacre in April 2007.
"It also looks for various calls for gun regulation in two US Supreme Court decisions that were favourable to gun companies.
"Now shares in gun companies have risen with each major event according to this algorithm,
and yes it is distasteful, but the algorithm shows an investment over the past decade would
have seen a 365 per cent return."
In simple terms, when there's been an attack or talk of gun control, stocks go up.
So what happened this time?
Stocks followed the same pattern as they did after the Sandy Hook school shooting and
the attack onPulse Nightclub in Orlando last year.
"There were signs of this today, with the American Outdoor Brands — a company formally known as Smith and Wesson — rose 3.2 per cent," he said.
"And another well-known US gun brand, Sturm Ruger & Co, jumped 3.5 per cent."
What does this tell us about investors?
"Well at terrible times like this, expectations in the US are that guns might be bought up by regular people on
speculation that the possible tightening of gun controls might actually come to pass," he said.
"That actually hasn't happened yet despite the various massacres.
"Also, before the Las Vegas shooting, gun stocks were also moving higher on a single report that the
Trump Administration was moving to make it simpler to sell small arms overseas.
"So it is a very uncomfortable question for people who make their money from the share markets."
The global head of currency strategy at State Street Global Advisors said he didn't see a direct correlation
However, Collin Crownover told The World Today, events like the Las Vegas shooting have
become factored in to market moves.
"That's a difficult question," Mr Crownover said.
"Certainly, we've become all too used to these types of events in the US, but I wouldn't say that anyone
has become completely accustomed to it.
"It's still an extraordinary tragedy.
"But as we know, sometimes financial markets only respond to things that directly affect financial markets.
"And in this case there wasn't so much of a direct impact. So I think I wouldn't necessarily draw a cause and
effect from the massacre to stocks being up and saying the US populace doesn't care that much about
these types of events.
"I think the reverse is true. I just think equities have been going up of late, and this was another day
where they did so."
But he said there was some "rationality" behind gun stocks going up
"If you feel that these types of events are more likely to happen to you, then you may feel that you have
to arm yourself to defend yourself," he said.
"Whether that's really the right policy to take, I'll leave that to smarter minds than myself.
But I find it slightly distasteful but I can understand why it happened.
"We've had a number of events in the US and [there has been no further tightening of gun laws] yet.
Is it a possibility? Sure.
"It's a possibility, but if the past events that we've had such as Sandy Hook or the Orlando shooting
haven't caused that to happen yet, I suppose I might be a little sceptical."
(http://www.abc.net.au/news/2017-10-...ns-go-up-when-a-mass-shooting-happens/9011692)
So is this normal? The ABC's senior business correspondent Peter Ryan spoke to The World Today to explain.
So, is it really happening?
Yes.
"So often we talk about geopolitical events in terms of market sentiment — things like terror attacks,
the US stand-off with North Korea," Ryan said.
"But local events like Las Vegas are being studied all the time in the United States.
"For example, a stock trading algorithm bought for the financial data company Thompson Reuters
has looked at 12 mass shooting over the past decade, starting with the Virginia Tech massacre in April 2007.
"It also looks for various calls for gun regulation in two US Supreme Court decisions that were favourable to gun companies.
"Now shares in gun companies have risen with each major event according to this algorithm,
and yes it is distasteful, but the algorithm shows an investment over the past decade would
have seen a 365 per cent return."
In simple terms, when there's been an attack or talk of gun control, stocks go up.
So what happened this time?
Stocks followed the same pattern as they did after the Sandy Hook school shooting and
the attack onPulse Nightclub in Orlando last year.
"There were signs of this today, with the American Outdoor Brands — a company formally known as Smith and Wesson — rose 3.2 per cent," he said.
"And another well-known US gun brand, Sturm Ruger & Co, jumped 3.5 per cent."
What does this tell us about investors?
"Well at terrible times like this, expectations in the US are that guns might be bought up by regular people on
speculation that the possible tightening of gun controls might actually come to pass," he said.
"That actually hasn't happened yet despite the various massacres.
"Also, before the Las Vegas shooting, gun stocks were also moving higher on a single report that the
Trump Administration was moving to make it simpler to sell small arms overseas.
"So it is a very uncomfortable question for people who make their money from the share markets."
The global head of currency strategy at State Street Global Advisors said he didn't see a direct correlation
However, Collin Crownover told The World Today, events like the Las Vegas shooting have
become factored in to market moves.
"That's a difficult question," Mr Crownover said.
"Certainly, we've become all too used to these types of events in the US, but I wouldn't say that anyone
has become completely accustomed to it.
"It's still an extraordinary tragedy.
"But as we know, sometimes financial markets only respond to things that directly affect financial markets.
"And in this case there wasn't so much of a direct impact. So I think I wouldn't necessarily draw a cause and
effect from the massacre to stocks being up and saying the US populace doesn't care that much about
these types of events.
"I think the reverse is true. I just think equities have been going up of late, and this was another day
where they did so."
But he said there was some "rationality" behind gun stocks going up
"If you feel that these types of events are more likely to happen to you, then you may feel that you have
to arm yourself to defend yourself," he said.
"Whether that's really the right policy to take, I'll leave that to smarter minds than myself.
But I find it slightly distasteful but I can understand why it happened.
"We've had a number of events in the US and [there has been no further tightening of gun laws] yet.
Is it a possibility? Sure.
"It's a possibility, but if the past events that we've had such as Sandy Hook or the Orlando shooting
haven't caused that to happen yet, I suppose I might be a little sceptical."
(http://www.abc.net.au/news/2017-10-...ns-go-up-when-a-mass-shooting-happens/9011692)
