On 11 September, 2017 – Stocks staged a global relief rally as tensions eased with North Korea and as hurricane Irma fades

Initial damage costs appear to be less than anticipated.

United States

US stocks rebounded Monday after hurricane Irma weakened without causing as much damage as many had feared. Travel companies and insurers advanced while home-improvement companies which rallied last week, declined. Global investors were also relieved after a North Korean national holiday passed without any other actions that would raise geopolitical tensions. The Dow Jones industrials were up 1.2 percent and the Nasdaq added 1.1 percent. The S&P also added 1.1 percent to close at a new record high.

Hurricane Irma weakened shortly before it came ashore Sunday in Florida and is still battering Florida and now Georgia. It has caused severe flooding and has left over 6 million without power. While the damage is still being assessed, small insurers, especially ones that do a lot of business in Florida, climbed as investors anticipated they won't have to pay out as much in claims as it looked like they would last week.

Heritage Insurance and Universal Insurance Holdings along with larger insurers such as XL Group and Travelers advanced. Investors anticipated now that travel-related companies will be less affected by the storm. Royal Caribbean Cruises and American Airlines gained. Travel booking site Priceline rose also rallied. Apple, which will unveil its newest iPhone on September 12, Facebook, Microsoft and MasterCard were among stocks that advanced. Tesla was higher on news that China is studying when to ban the production and sale of cars using traditional fuels. Teva soared after the generic drug maker named a new chief executive.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$12.05 to US$1,334.20. Copper futures were up 0.9 percent to US$3.07. WTI spot crude was up 56 US cents to US$48.04. Dated Brent spot crude was slipped 2 US cents to US$53.76. The US dollar was up against the yen, euro, pound, Swiss franc and the Australian dollar. The currency declined against the Canadian dollar. The Dollar Index was up 0.5 percent. The yield on US Treasury 30 year bond was up 7 basis points to 2.74 percent while the yield on the 10 year note was up 8 basis points to 2.13 percent.

European markets

European stocks advanced Monday as investors breathed a sigh of relief after the damage — although quite significant from Hurricane Irma — over the weekend was less extensive than had been feared. Traders were also relieved that North Korea did not launch another ballistic missile over the weekend as had been expected. The FTSE was up 0.5 percent, the CAC gained 1.2 percent, the DAX advanced 1.4 percent and the SMI added 0.8 percent.

Insurance stocks were among the best performing stocks Monday. The stocks were under pressure before Hurricane Irma. Traders also left safe havens in favor of riskier investments. Investors were also waiting for the results of a key vote on the European Union (Withdrawal) Bill in the UK Parliament. Lawmakers are debating the bill in the House of Commons that is aimed at transferring European Union legislation into UK law on the day the country leaves the bloc in March 2019. Traders are also looking forward to Thursday’s policy decision from the Bank of England.

Sanofi declined after the company and Regeneron Pharmaceuticals announced that their biotech drug to treat severe asthma has met its two primary endpoints in a late-stage Phase III clinical study. AstraZeneca rallied after reporting positive results from two trials for lung cancer treatments. British Land gained on a broker upgrade. Associated British Foods sank despite raising its outlook for full year results. H&M advanced in Stockholm on a broker upgrade. Swiss Re, Zurich Insurance, Bâloise and Swiss Life rallied along with Hannover Re, Munich Re and Swiss Re. Credit Suisse and UBS also advanced. Novartis and Nestlé were higher but Roche retreated.

The French economy is expected to grow at a steady pace in the third quarter, according to survey data published by Bank of France. Gross domestic product is forecast to expand 0.5 percent in the third quarter and the same as in the second quarter. Italy's industrial production increased for the third straight month in July. Industrial output edged up a monthly 0.1 percent but well below the 1.1 percent increase posted in June.

Asia Pacific

Most Asian stocks rose Monday as fears about hurricane Irma have waned and North Korea refrained from launching more missiles over the weekend despite speculation that it would do so. The US dollar advanced as the United Nations prepared to vote on a new round of sanctions against North Korea. Oil was helped by reports that the production cut deal that OPEC, Russia, and several other producers agreed to late last year could be extended beyond March 2018.

The Shanghai Composite was up 0.3 percent after inflation data released over the weekend was better than expected. August consumer prices were up 1.8 percent on the year in August after increase just 1.4 percent in July. August producer prices increased 6.3 percent from a year ago after increasing 5.5 percent in the three preceding months. The offshore yuan declined after the People’s Bank of China reportedly scrapped reserve requirements on the trading of foreign-exchange forwards. Analysts interpreted it as a signal the PBoC doesn’t want to see the yuan appreciate too quickly against the dollar. A strong yuan would benefit sectors such as banking, real estate and airlines, but hurt exporters. The Hang Seng was up 1.0 percent.

The Nikkei and Topix advanced 1.4 percent and 1.2 percent respectively after the US dollar rebounded against the yen. July core machinery orders increased 8.0 percent on the month (seasonally adjusted) in July after falling 1.9 percent in June. This series, which excludes orders for ships and those from electric power companies, is considered a proxy for capital expenditures. Honda and Toyota were higher. Mitsubishi UFJ Financial, Mizuho Financial and Nomura Holdings also advanced.

The S&P/ASX was up 0.7 percent and the All Ordinaries added 0.6 percent. Commonwealth Bank was higher after recent steep losses on allegations of a breach in money laundering rules. The other three big banks also closed higher. Macquarie Group climbed after affirming its full-year earnings. However, weakness in iron ore and nickel prices pushed mining stocks lower, with BHP Billiton, Rio Tinto, South32 and Fortescue Metals Group retreating. Gold miners Evolution, Newcrest, Northern Star and Regis Resources also were lower.

The Kospi was up 0.7 percent on institutional buying in technology stocks as North Korean tensions eased somewhat. The Sensex added 0.6 percent.

*Note — all releases are listed in local time.

Source: Fidelity

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