The market in bird flu is currently sitting at 22 countries during 2007, according to a virtual trading service being run by Thomson Financial and the World Economic Forum ahead of this month’s Davos meeting.
According to the data — extracted from market participants who are trading with play money — such a widespread outbreak (against human cases in nine countries last year) will trigger a fall of 0.4 per cent on the Down Jones Industrial Average. If the spread of avian flu reaches 60 countries, however, traders reckon the Dow will respond with a fall of 10 per cent.
But Thomson’s traders are in no mood to panic. Indeed, on a more general level, according to the information supplier’s General Financial Risks Indicator, which pools predictive data, conditions remain remarkably benign.
As the graph here shows, instability in the Middle East produced a spike in concern last summer before the withdrawal of Israel from Lebanon saw a sharp fall in the perception of risk. A return to more “normal” levels later in the year is put down to growing concerns over the health of the US economy.
