- The Washington Times - Sunday, December 14, 2003

Saddam Hussein’s capture by U.S. forces Saturday gave an immediate boost to some international financial markets yesterday and analysts expect the news will produce a bounce in U.S. markets today.

Israeli stocks soared yesterday with news that Saddam was in U.S. custody. Tel Aviv’s main index jumped 3.4 percent to 494.90, its highest level in nearly three years. The Egyptian stock market rose 3.2 percent.

The new Iraqi currency also got a boost, more than doubling in value against the Kuwaiti dinar and U.S. dollar.

Financial analysts predicted that Saddam’s capture would elevate U.S. markets today as investors grow more confident that postwar Iraq will be stabilized.

“It’s broadly positive for equity markets,” said Hillary Cook, director of investment strategy at Barclays Stockbrokers. “Concerns over the situation in Iraq have weighed on sentiment and help explain why shares haven’t rallied as much as they could have in the face of some pretty positive economic data.”

The long-term economic impact of Saddam’s capture is not clear, though. Many analysts said any market boost this week will stem from a shift in attitude toward Iraq, rather than the stock market itself.

Many stocks are already fully valued or even overvalued, analysts said, meaning any market rally will be short-lived.

The Dow Jones Industrial Average has risen 20 percent this year. It closed above 10,000 for the first time in 18 months on Friday.

“I think this is mostly going to be psychological [today] for markets,” said Sen. Jon Corzine, a New Jersey Democrat and former chairman of Goldman Sachs. “But I think it will be real.”

He said there was “no downside whatsoever to the fact that our military men and women have created a positive momentum with regard to the actions that we’re taking in Iraq.”

The Dow could grow about 0.8 percent today, according to City Index, a British betting company.

City Index also predicted Britain’s benchmark FTSE 100 Index may open 60 points higher, or up 1.4 percent.

A broader economic surge could come if Iraq boosts its output of oil, as some analysts suggested would occur after Saddam’s capture.

An adviser to Iraq’s oil minister said that with Saddam in custody there will be fewer attacks against oil fields.

Iraq’s current oil output is about 2.5 million barrels per day. Oil and gas pipelines in Iraq have been sabotaged more than 80 times since the beginning of the war in April, slowing production.

One analyst warned against predicting the impact of Saddam’s capture on oil prices or prices at U.S. gasoline pumps.

“Anything we say would just be speculation at this point,” said Susan Hahn, spokeswoman for the American Petroleum Institute.

Retail industry observers, meanwhile, said Saddam’s capture will likely have a positive impact on shoppers’ holiday mood.

“Ultimately, in the long run, this is going to put people in better spirits, and we are definitely excited that this has come during the holiday season,” said Ellen Tolley, spokeswoman for the National Retail Federation. “This is a piece of news that we were not expecting.”

This article is based in part on wire service reports.


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