Beyond the cumulative human tragedy, it is yet another unwelcome reminder that the world faces major geopolitical challenges which will not be easily solved. I need not go into detail, but the implosion of first Iraq and now Syria and the subsequent rise of Islamic State is a problem that will have a profound affect on European politics in the years ahead. Already it has spawned a regional refugee crisis on a vast scale with which Europe's leaders are struggling to cope. The fear must be that a backlash against imported Islamic terrorism, as many will perceive it, strengthens the position of far right politicians in Europe. A discombobulating battle of intractable ideologies looms.
It is not, of course, the role of Investors Chronicle to postulate on politics, and certainly not on the failings of humanity. But we have a responsibility to be mindful of the effect that such events have on markets, and the reality is that this year's escalation of terrorist violence has hardly troubled them at all. Only travel-rated industries have suffered weakness directly attributable to geopolitical uncertainty. The enlarged Tui group has slipped since its summer merger despite decent booking trends, overshadowed by tragedies in Tunisia and Egypt. Even sector star easyJet has suffered despite strong tailwinds of recovering economies in Europe and low fuel costs. Its shares slipped this week despite reporting record results for the fifth year in a row and are now lower than where they were at the start of 2015.
Should we be worried of the negative sentiment spreading, though? Officials at the ECB are worried that the rising terror threat could halt the fragile eurozone recovery. Others like BlackRock suggest it could make a solution to the refugee crisis more difficult and swing Britain further towards the EU exit. I would suggest that slowing global growth is the greater concern. Optimists will suggest that most of the slowing down is happening in emerging markets, and that Western economies are continuing to rise nicely. Yet it is those emerging markets that many listed businesses invested in when the west was weak, and a slowdown has already started to hurt investors in sectors such as banking and engineering. Indeed, profit warnings are at elevated levels, and as one successful investor pointed out to me last week the reaction to them appears more severe than we are used to seeing. Judicious cost control and acquisitions are staving off problems for many companies. But pressures are clearly mounting.
