Publications
Partners
Sydney - The dollar gained, Treasuries retreated and stocks advanced as an appetite for risk returned after an anticipated North Korean missile test failed to materialise and Hurricane Irma struck the US with less force than feared.
Gold, the yen and the Swiss franc all fell.
Bloomberg’s dollar index was headed for the first increase in eight days, while US stocks rallied, Treasuries slipped and insurers jumped after Irma weakened and shifted direction to spare Miami a direct hit. The Stoxx Europe 600 Index climbed the most in more than three weeks as all the region’s major stock gauges advanced. Crude erased earlier gains even as Gulf Coast refining capacity continued to recover.
Pyongyang warned of retaliation if the UN Security Council approves harsher sanctions over its recent nuclear test in a vote on Monday. But speculation had mounted that the country would mark the anniversary of its founding with another missile over the weekend - and that didn’t happen.
“The better risk environment has seen Treasury yields move higher while the yen retreated,” Chris Scicluna, the head of economic research at Daiwa Capital Markets in London, wrote to clients.
Hurricane Irma appeared “not to be quite as catastrophic as had been feared last week” and “thankfully there was no bad weekend news out of North Korea.”
Meanwhile, Federal Reserve speakers are now in a blackout period before next week’s policy meeting, so investors are likely to devote much of their attention to assessing the impact of natural disasters on US growth.
While the most dire predictions about Irma seem to have been avoided, the storm converted streets into rivers, hammered Caribbean islands and the Florida Keys with deadly fury, and left at least 4.7 million without power and millions temporarily displaced. Enki Research’s estimate for total damages dropped to $49bn from $200bn earlier.
The key events this week:
• US retail sales and inflation data are due this week.
• Brexit Secretary David Davis warned UK lawmakers that blocking the Repeal Bill could lead to a “chaotic” departure from the EU. The measure goes to a vote on Monday.
• The Frankfurt Motor Show is underway.
• Norway’s election is today.
• Apple will reveal its newest products on Tuesday, which will probably include new iPhones and a fresh version of the Apple watch.
• The Bank of England will almost certainly leave policy unchanged on Thursday, even though the UK inflation reading two days earlier may show a pickup.
• Also due this week, India’s trade surplus and China’s August industrial production, retail sales and fixed-asset investment.
• Australia releases jobs data on Thursday.
Here are the main moves in markets:
Stocks
• The S&P 500 Index gained 1% to the highest in five weeks on a closing basis.
• The Stoxx Europe 600 Index jumped 0.9% as of 9:31 New York time to the highest in almost four weeks.
• The MSCI All-Country World Index climbed 0.2% to the highest on record.
• The MSCI Emerging Market Index increased 0.4% to the highest in about three years.
Currencies
• The Bloomberg Dollar Spot Index gained 0.4% to 1 140.31, the first advance in more than a week.
• The euro declined 0.4% to $1.1985, the first retreat in more than a week.
• The British pound weakened less than 0.1% to $1.3196, the first retreat in a week.
Bonds
• The yield on 10-year Treasuries rose six basis points to 2.11%, the highest in a week.
• Germany’s 10-year yield climbed three basis points to 0.34%.
• Britain’s 10-year yield increased five basis points to 1.04%, the highest in a week.
Commodities
• Gold sank 1% to $1 332.56 an ounce for the biggest tumble in 10 weeks.
• West Texas Intermediate fell 0.7% after gaining as much as 1%.
• Base metals rebound from biggest drop in 9 months, with zinc leading gains.
Asia
• The Topix index rose 1.2% at the close in Tokyo, its steepest advance since early June.
• South Korea’s Kospi index added 0.7% as did the S&P/ASX 200 Index in Sydney.
• Hong Kong’s Hang Seng Index rose 1%, while gauges in China were mixed.
• The MSCI Asia-Pacific Index added 0.4% to hit the highest since December 2007.
• The Japanese yen sank 0.9% to 108.84 per dollar, the biggest dip in almost four weeks.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
