Investors are not reacting positively to setbacks in the invasion in Iraq. Early futures-trading has fallen hard, foreshadowing a down start to equities trading Monday.

Analysts are beginning to ask how the American economy will fare, even if the invasion of Iraq ends quickly. For example, after the Gulf War in 1991, an anemic economic recovery cost the first President George Bush his job.

In Europe, London’s FTSE 100 sunk 2.88% in Monday morning trading. Frankfurt’s DAX has dropped 3.78%. Paris’s CAC 40 has declined 3.18%.

In Asia, the Japanese Nikkei Stock Average rose 240.02 points overnight to 8,435.07, but
in Hong Kong, the Hang Seng Index fell 70.74 points to close at 9,108.45

The Canadian economy continues to show strength. Statistics Canada is reporting an advance in retail sales in January to 0.7% to $26. billion. This follows essentially unchanged sales in December of a 0.1% increase, and a 0.5% decline in November. Excluding sales by motor and recreational vehicle dealers, retail sales increased 1.5% in January.

This is good news for Canadian retailers, who experienced a lacklustre Christmas holiday season. For 2002, retailers posted their second largest annual sales gain in five years, with an increase of 6.0% from 2001.