Global markets rally as Irma, N Korea fears ease

Wall Street was sharply higher yesterday morning in a broad rally led by technology and financial stocks, especially insurers, on relief that Irma weakened to a tropical storm and North Korea did not conduct a nuclear test as feared. Irma pounded heavily populated areas of central Florida over the weekend, but gradually lost strength and was downgraded to a tropical storm in the morning.

Irma had started off a category 5 hurricane and was once ranked as one of the most powerful recorded in the Atlantic. It came on the heels of Hurricane Harvey, whose devastations economists said would dent third-quarter economic growth. Also boosting risk appetite was North Korea holding a massive celebration on its founding day on Saturday, instead of another long-range missile launch as the United States and its allies were bracing for. With the tensions easing, world stocks climbed to a record high, while the dollar edged higher and gold retreated from Friday’s 13-month high.

“For now, we’re seeing a bit of a relief rally. It does appear that the worst-case scenario for Florida has been evaded,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

At 9:37 am ET (1337 GMT), the Dow Jones Industrial Average was up 172.84 points, or 0.79 percent, at 21,970.63 and the S&P 500 was up 17.64 points, or 0.72 percent, at 2,479.07.

The Nasdaq Composite was up 63.32 points, or 1 percent, at 6,423.51. “However, a big question remains on the sanctions from the United Nations ... you just have to wait and see the reaction from North Korea,” Cardillo said.

The UN Security Council is set to vote yesterday on a watered-down US-drafted resolution to impose new sanctions on North Korea over its latest nuclear test, diplomats said. All the 11 major S&P indexes were higher, with the technology and the financial sectors’ more than 1 percent rise leading the gainers.

Shares of insurers, which had been under pressure after the back-to-back natural disasters, gained. Allstate and Chubb were up about 3 percent. Travelers jumped about 3.5 percent, leading the Dow higher. Florida insurers gained more. Universal Insurance Holdings , Heritage Insurance and HCI Group all surged about 15 percent. Apple rose 1.5 percent to $161.07, giving the biggest boost to the S&P and the Nasdaq, a day ahead of the expected launch of its new iPhone.

A host of biotech stocks were also higher after reporting positive news on their drug developments. Among them, Marinus Pharma surged about 56 percent and Idera Pharma gained about 16 percent. Also boosting pharma stocks was Teva, which jumped 13 percent after naming a new chief executive. Advancing issues outnumbered decliners on the NYSE by 2,212 to 385. On the Nasdaq, 1,956 issues rose and 496 fell.

“Markets have started the week in a positive fashion, with risk assets firmly in the driving seat at the expense of the commonly perceived havens such as gold, treasuries (US government bonds), and the yen,” said Joshua Mahony, market analyst at IG traders.

Asian stock markets pushed higher as traders breathed a sigh of relief that Pyongyang did not fire another missile on Saturday, choosing instead to mark its foundation day with a parade.

“Stock markets are strong... as the geopolitical and environmental issues haven’t turned out to be as bad as traders previously predicted,” said David Madden, analyst at CMC Markets UK.

Both Paris and Frankfurt were up 1.1 percent in afternoon trading, while London stocks trailed with a 0.2 percent gain. Wall Street opened higher, with the Dow climbing 0.8 percent in the first minute of trading.

‘Solidly higher’

In foreign exchange, the European single currency was trading down at $1.1978 compared with $1.2030 late in New York on Friday. The euro on Friday reached $1.2092, the highest level since January 2015 as traders bet on the European Central Bank winding in its huge stimulus program.

The pound meanwhile steadied yesterday awaiting British MPs first vote on a bill to end Britain’s membership of the EU. The focus was now also on the UN Security Council, where Washington is pushing for a vote yesterday on tough fresh sanctions against Pyongyang, despite resistance from China and Russia. The greenback had come in for a pounding in recent weeks on waning expectations for further Federal Reserve interest rate rises and doubts about US President Donald Trump’s chances of pushing through his marketfriendly economic policies. However, it bounced back yesterday, surging above 108 yen from Friday’s 10-month lows. On oil markets, US prices fell further after taking a beating Friday caused by Hurricane Irma threatening crude supplies.

Key US oil contract West Texas Intermediate sank 3.3 percent Friday while European benchmark Brent North Sea crude slid 1.3 percent in value. Irma, which has toppled cranes, swallowed streets and left millions without power, was starting to weaken yesterday while still pummeling parts of Florida on its destructive march north. — Agencies