After the U.S. military’s daring raid that killed Osama bin Laden on Sunday, Americans spilled into the streets to celebrate the demise of the architect of the attack on the World Trade Center nearly 10 years ago, but on Monday, the markets reacted to the news with little fanfare.
Oil, gold and U.S. stocks all showed a mild increase in the morning and then dropped slightly in midday trading.
“It’s an incrementally safer world. The geopolitical premium that’s in oil has shrunk a little bit today,” said Alec Young, equity strategist with Standard & Poor’s Equity Research, in an interview just after noon. “Oil is down a little today. The oil markets are viewing the bin Laden killing as reducing geopolitical risk, but at the margin. You had a $113 per barrel oil asset on Friday, and now it’s at $112.”
Stocks were flat in midafternoon trading on Monday, with the Dow Jones industrial average up 11 points, 0.1% higher, at 12,822. The S&P 500 was flat, at 1,364. Light crude was down 0.09 point, or 0.08%, at $113.84, and Comex gold was up $2.10, or 0.13%, at $1,558.10.
According to Morningstar, shares of the iPath S&P GSCI Crude Oil TR Index (OIL) exchange traded fund rose slightly in morning trading and had dropped 0.11% by midafternoon to $29.95. The SPDR Gold Shares (GLD) ETF also rose in the morning and was down 0.41% to trade at $151.75.
If bin Laden had been killed closer to Sept. 11, 2011, and al-Qaida were more of a clear and present danger in the immediate wake, “you would see a much bigger market reaction,” S&P’s Young said. “It’s psychological. These are human beings trading, so it’s emotional. Is there really any relationship between this guy being alive or dead and the price of oil? I don’t think so, but people will trade on it.”