Grappling With an Old Enemy

The biggest impact will be, obviously, in the U.K. Beyond the bombings' symbolic timing to coincide with the meeting of G8 countries in Scotland, it also occurred as the BOE's Monetary Policy Committee was scheduled to make its decision on interest rates Thursday. As it happens, U.K. rates again were left unchanged at 4.75%, where they've stood since August last year.

However, the BOE, which was already leaning toward a cut in interest rates, may now be closer to that step. The British housing market, which has been booming over the past several years much like in the U.S., has started to slow recently, dampening British consumption.

"We thought that the Bank of England was inclined toward cutting interest rates at the August [Monetary Policy Committee] meeting even before today's attacks," Goldman's Dudley wrote to clients. "At the margin, this probably adds to the likelihood."

As for the ECB, it also will remain on alert. So far, it has resisted pressure from the European Parliament to cut rates, which would further hurt the euro and make exports more competitive. A lower euro would also make high energy prices even more expensive and further cut into the already sluggish growth of eurozone countries.

To view Aaron Task's video take on today's market, click here.