By Debra Borchardt
with contributions from Laure Guilbault
 on March 23, 2016
People light candles at the Place de la Bourse in Brussels following the attacks.

On edge, but coping.

That appears to be the new attitude in the modern world as Europe continued to reel from the terrorist attacks in Brussels on Tuesday that claimed 31 lives and injured 271 people, and major U.S. cities remained on high alert about possible attacks. The U.S. State Department issued a warning to its citizens about traveling to Europe and the threat of further potential terrorist attacks.

Yet while the Brussels airport where one of the attacks took place remained closed Wednesday, Belgian department store chain Galeria Inno, a subsidiary of Hudson’s Bay Co.’s Kaufhof department store division, decided to reopen its four stores in greater Brussels with “appropriate security measures,” said a spokesman, who noted details aren’t revealed so as not to undermine their efficacy.

Paris Mayor Anne Hidalgo went to the Belgian capital on Wednesday to show support and pay tribute to the victims at the Maelbeek metro station. She ordered the Eiffel Tower to be illuminated in the colors of the Belgian flag to show solidarity with the victims and the Belgian people until Sunday night. There were moments of silence in Brussels for the victims of the attacks as the manhunt went on for suspects.

But just as occurred in Paris following the terrorist attacks last November, there already was a sense that people were returning to their daily routines. Movie theaters in the center of Brussels reopened Wednesday after being closed the day before.

And while leading industry figures and analysts warned there could be a further impact on tourism — and thus retail sales — from the attacks, there was a muted response on global stock markets. As expected, the major European indices fell after the attacks on Tuesday. The biggest loser was the STOXX Europe 600 Travel and Leisure Index, which fell by 2.2 percent. The U.S. markets all closed lower on Tuesday on fears of more attacks.

But the markets rebounded on Wednesday, with the German DAX and the U.K. FTSE both closing higher, while the French CAC closed down by only 7 points to 4,423. The Euronext Bel 20, which is a widely used Belgium market indicator, also closed higher on Wednesday.

Luxury shares also held their own on Wednesday. LVMH Moët Hennessy Louis Vuitton SE opened on Tuesday at 149.70 euros, or $167.37 at current exchange, and on Wednesday the stock closed up at 150.15 euros, or $167.88. Kering SA opened at 159 euros on Tuesday and closed lower at 158.25, or $176.92. The shares were flat on Wednesday, closing at 158 euros, or $176. Burberry stock opened at 13.39 pounds and by Wednesday, the stock added another 22 pence to close at 13.67 pounds, or $19.29.

In the U.S., stocks experienced some selling, but it was attributed to a slide in the price of oil, not the Belgium attacks. The Dow Jones Industrial Average closed down 79 points to 15,502 and the S&P 500 fell by 13 points to close at 2,036. Oil dropped below $40 a barrel. The S&P Retail Index dipped 1.2 percent to 44.97.

In U.S. luxury stocks, Coach stock opened at $39.17 on Tuesday and closed at $38.86. On Wednesday, it closed down another 11 cents at $38.75. Tiffany’s stock opened at $71.53 on Tuesday and was also lower by the end of the day at $72.58. On Wednesday, the stock slid slightly to close at $71.98. Macy’s also dropped from $44.12 on Tuesday to close at $43.78. It declined again on Wednesday to close at $43.43.

“We’ve kind of become numb. You look at the markets in Europe and Canada and here — the reaction is fairly modest,” said David Nelson, chief strategic officer at Belpointe Asset Management. “You’re going to see the knee-jerk reaction selloffs in things like airlines and transportation stocks.”

Francesca Peck, an economist at IHS Global Insight, believes the Belgian attacks will have a short-lived negative impact on the local economy. “As terrible as the events in Brussels have been, economic activity is typically pretty resilient to terrorist attacks,” wrote Peck.

“Markets have learned from previous episodes that the macroeconomic effects tend to be limited and they fade. Whether it’s been Paris, London or other horrific tragedies. The impact on the economy has been contained,” said Mohamed A. El-Erian, the chief economic adviser at Allianz. “As such, markets don’t rush in to price down major slowdown economic growth in corporate earnings.”

While the broader markets may not be overreacting, there is still some concern within the luxury houses that tourism could be affected.

On Wednesday morning, Hermès International SCA chief executive officer Axel Dumas forecast a difficult year ahead, with subdued growth as terrorism continues to sap tourist spending. “We haven’t had the same level of tourism in France this year as before,” Dumas told reporters in Paris as the company reported 2015 earnings that rose 19 percent. He said 2016 will be “complicated” by headwinds the industry faces across the globe, yet struck a resilient tone: “We don’t have to panic. A challenge never hurt anyone.”

Tiffany & Co. ceo Frederic Cumenal was almost prescient when he stated just last week that tourism could be affected by terrorism and thus hurt sales. “We believe that because of what’s going on in Europe as a combination of Brexit in the U.K., migrants in Continental Europe and in the U.K., and risk of terrorism or perception of risk of terrorism, we believe that the tourism business in Europe, that is the main driver of sales for this region, will be down significantly,” he said.

Michele Norsa, chief executive officer at Salvatore Ferragamo SpA, was more positive last week, though. “Approximately half of the people who entered Europe entered into France. And in recent months, this trend has been modified. But I would say that even after the Paris terrorism events, the international traffic has kept growing.”

Moody’s Investor Services wrote that one long-term effect of these terrorism events is that there could be a reallocation of resources by governments from growth-enhancing investment to spending designed to increase national security or to capture terrorists. That was quickly evident as the U.S. stepped up its security measure, while France increased its forces.

France’s interior minister Bernard Cazeneuve and defense minister Jean-Yves Le Drian went to Roissy on Wednesday to check heightened security measures at the largest French airport. They met with different security forces, thanking them in advance for their “increased vigilance over the Easter weekend,” AFP reported. Cazeneuve noted that 5,000 additional officers are mobilized to secure French borders, especially on the northern border, with 42 border crossings being controlled permanently 24/7 — out of 220 border crossings overall — while the others are being checked on more randomly.

The increased spending on security doesn’t look to be changing anytime soon. ISIS made a statement on al-Bayan, the caliphate’s radio network, promising a larger attack on Belgium. Meanwhile, Belgium’s chief prosecutor named two brothers on Wednesday as suicide bombers, but said another key suspect was on the run. A manhunt is underway for the suspect.