US equities diverge as investors brace for Irma; Europe banks up US

Dollar hits low note while euro shines

NEW YORK, Sept 9, (Agencies): Reduced expectations for another US Federal Reserve interest rate hike this year helped drive down the dollar to its lowest in more than 2-1/2 years on Friday and kept gold near a one-year high.

The euro hit multi-year peaks in the wake of a European Central Bank (ECB) meeting, while US crude oil prices tanked more than 3 percent as powerful Hurricane Irma roared toward Florida.

Stubbornly weak inflation continues to surprise Fed policymakers. In a speech on Thursday, New York Fed President William Dudley did not repeat an assertion from three weeks ago that he expects to raise rates once more this year.

Also dampening the dollar and lowering the chances of another rate hike was an agreement in Congress to push US debt ceiling talks three months down the road to December, coinciding with the Fed’s policy meeting.

Against a basket of other major currencies, the dollar index was down 0.38 percent after touching a low of 91.011, its weakest since January 2015.

The safe-haven Japanese yen also strengthened 0.61 percent versus the greenback at 107.80 per dollar, and the euro rose 0.12 percent to $1.2036.

The euro’s rally built on ECB President Mario Draghi’s suggestion that it may begin tapering its massive stimulus program this fall.

Draghi referred several times Thursday to the euro’s strength and said it was the main reason for a cut in the bank’s 2018-19 inflation forecasts. He also indicated any winding down of its massive stimulus program was likely to be slow.

Those comments did little to deter euro bulls, however, and a Reuters report that central bank officials were in broad agreement that their next step would be to reduce their bond purchases also supported the currency.

US shares were mixed, with the S&P ending slightly lower as investors braced for Irma and fretted that Pyongyang could launch another missile test on Saturday, North Korea’s founding day, keeping risk appetite in check going into the weekend.

The S&P 500 ended slightly lower on Friday as investors braced for potential damage from Hurricane Irma as it drove toward Florida, while a decline in big tech names like Apple and Facebook pushed the Nasdaq down more sharply.

The Dow eked out a gain, helped by a 4.0-percent rise in shares of insurer Travelers.

Insurer shares rose broadly, with the Dow Jones US Insurance Index up 2.1 percent, recouping some losses after being under pressure recently as the southern United States braced for another powerful storm closely on the heels of Hurricane Harvey.

The Dow Jones Industrial Average rose 13.01 points, or 0.06 percent, to 21,797.79, the S&P 500 lost 3.67 points, or 0.15 percent, to 2,461.43 and the Nasdaq Composite dropped 37.68 points, or 0.59 percent, to 6,360.19.

The tech sector, which has outperformed all other major groups this year, ended down 0.9 percent. Shares of Apple were down 1.6 percent while shares of Facebook fell 1.3 percent.

Energy shares fell 1.1 percent as oil prices dropped on worries that commerce and energy demand in Florida and the Southeast would be hit hard due to Irma.

Shares of Home Depot and Lowe’s Cos, which have gained amid of the arrival of the storms, rose on Friday. The stocks were up 1.1 percent each.

Major indexes all posted declines for the week after two weeks of gains. Geopolitical concerns kept investors on edge as South Korea prepared for a possible further missile test by North Korea on Saturday, days after its sixth and largest nuclear test.

Equifax was the biggest percentage loser on the S&P, falling 13.7 percent, after the provider of consumer credit scores said personal details of as many as 143 million US consumers were hacked.

Kroger shares ended down 7.5 percent after the biggest US supermarket owner reported a quarterly profit drop amid an intensifying grocery price war.

Declining issues outnumbered advancing ones on the NYSE by a 1.19to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored advancers.

About 6 billion shares changed hands in US exchanges, above the 5.8 billion daily average over the last

20 sessions.

Europe

European shares ended little changed on Friday as the euro’s rally dimmed appetite for regional stocks but talk about possible cuts to European Central Bank stimulus boosted banks.

The broader pan-European STOXX 600 benchmark edged 0.15 percent higher, while eurozone blue chips ended unchanged.

After suffering four straight sessions in the red, European banks rose 0.9 percent, leading gainers in Europe, after Reuters reported that European Central Bank policymakers had agreed at Thursday’s meeting on the need for a cut in stimulus.

Elsewhere, shares in British pub operator Greene King fell 15.7 percent after a weak sales update and French fuel storage company Rubis was down 4.1 percent after its first half results.