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Words in the News
Wednesday 26 March 2003
War Markets
Tank in Iraq Military developments have affected the world's financial markets. Oil and gold prices have risen; the dollar and European stock markets have fallen. This report by Andrew Walker.
Listen Listen to the story
There is a clear pattern to the way financial markets are responding to military developments. The underlying principle is that investors want it all to be over quickly, to dispel the uncertainty that is clouding the economic outlook. Any sign that it might drag on - and developments over the weekend are being interpreted in those terms - makes investors more reluctant to take financial risks.

Shares are a relatively risky asset, so they have fallen. The dollar too has fallen, because, unusually in this war, it too is seen as relatively risky by foreign investors. Gold is the long favoured safe financial refuge, so it has risen.

And the prospect of a relatively long conflict also affects the oil price, because there may be an increased risk of substantial disruption to supplies. All these market price moves are reverses, but only partial reverses, of the shifts that happened when the conflict started last week. Shares are overall still higher and oil lower than they were shortly before the hostilities began.
Listen Listen to the words
underlying principle
the cause
people who buy shares or pay money into a bank in order to receive a profit
to dispel
to dispel a feeling means to stop people feeling it
clouding the economic outlook
making it difficult to understand the future economic situation
drag on
if a situation drags on it lasts longer than seems necessary
compared with other things
the long favoured safe financial refuge
the investment that people have thought of for a very long time as secure
substantial disruption to supplies
severe problems with (oil) supplies
partial reverses
a reverse is a move in the opposite direction; a partial reverse means the reverse is not complete
the shifts
the (market price) moves
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