Flight to quality in the Euroland markets

After a rebound across the board in the second half of 2003, the first quarter of 2004 saw a correction in markets as investors re-assessed their positions. This happened partly as a result of events in Spain, but also because of overstretched valuations. Lower quality, highly-geared companies will not now be pulled along by a momentum of ever-rising markets. There will, instead, be a focus on quality. The terrorist attack in Madrid has two prospective consequences for European markets. First, uncertainty has returned as investors speculate on the possibility of future attacks in other Eu...