Stocks rally after Irma downgraded
A global equity index surged to a record high and the dollar gained on Monday, spurred by relief that Hurricane Irma weakened to a tropical storm and that North Korea's anniversary celebrations on the weekend passed without a new missile test.
Gold prices fell as did the price of benchmark German and U.S. Treasury debt as demand slipped for safe-haven assets and investors took on more risk after North Korea marked its founding on Saturday without new provocations.
Ranked as one of the most powerful hurricanes ever recorded in the Atlantic, Irma hit a wide swath of Florida on Sunday before being downgraded to a tropical storm. While heavy flooding swamped many cities, including Miami, the state's largest city was spared the brunt of the storm.
"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.
MSCI's all country world stock index, which tracks more than 2,400 stocks in 47 countries, hit its latest peak as Europe's insurers rose more than 2 per cent on hopes Irma's damage would not prove as costly as feared.
The all-country index is up 14.6 per cent year-to-date.
Shares on Wall Street jumped about 1 per cent, with the benchmark S&P 500 index less than two-tenths of a percentage point away from record territory.
The Dow Jones Industrial Average rose 262.91 points, or 1.21 per cent, to 22,060.7, the S&P 500 gained 26.08 points, or 1.06 per cent, to 2,487.51 and the Nasdaq Composite added 67.14 points, or 1.06 per cent, to 6,427.33.
All the 11 major S&P sectors higher, led by gains in technology and financial stocks.
Shares of U.S. and European insurers jumped, with companies particularly exposed to Florida posting sharp gains as the losses from Irma were seen as being less severe than feared.
Shares of Florida insurers Heritage Insurance Holdings Inc (HRTG.N), HCI Group Inc (HCI.N) and Universal Insurance Holdings Inc (UVE.N) all rose about 14 per cent.
In Europe, shares of reinsurers Swiss Re AG and Scor SE rose 3 per cent or more, and insurers helped drive stock indexes in the region.
The pan-European FTSEurofirst 300 index rose 1.05 per cent to close at 1,491.19 and MSCI's gauge of global stocks gained 0.81 per cent. MSCI's emerging markets index rose 0.67 per cent.
The relief over North Korea and a weaker yen helped the stock market in Tokyo to its best session since June.
Investors are so focused on the hurricane's fallout and the Federal Reserve's potential monetary tightening that they're missing the enormous boost the weaker dollar and low interest rates will give the U.S. economy, said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis.
"We are massively stimulating this economy that's already doing pretty well," Paulsen said. "That's likely to accelerate an already-good economy even further the next 12 months."
The dollar index, which tracks the greenback against a basket of six major currencies, was 0.56 percent higher at 91.867.
The index had hit a more than 2-1/2-year low of 91.011 on Friday as investors fretted about the short-term impact of Irma on the U.S. economy and simmering tensions with North Korea.
The euro fell 0.57 per cent to US$1.1963 against the greenback, while the Japanese yen weakened 1.36 per cent at 109.30 per dollar.
Germany's benchmark 10-year bond yield pulled further away from recent 2-1/2 month lows and yields on benchmark U.S. Treasury debt rose from 10-month lows.
The 10-year U.S. Treasury note last fell 17/32 in price to yield 2.1218 per cent, up from 2.061 per cent late on Friday.
German Bunds last fell 2 basis points in price to yield 0.336 per cent.
Oil prices rose as the upward pressure from U.S. refinery restarts and Saudi talks to extend production cuts outweighed demand fears driven by Irma's continued pounding of Florida.
Losses were capped by weekend talks between Saudi Arabia's energy minister and counterparts over a possible extension to a pact to cut global oil supplies beyond next March.
Brent crude oil futures for November delivery settled up 6 cents at US$53.84 a barrel, while benchmark U.S. West Texas Intermediate crude rose by 59 cents to US$48.07.
Spot gold dropped 1.3 per cent to US$1,329.30 an ounce. U.S. gold futures fell about 1.3 per cent to settle at US$1,335.70 an ounce.