World stocks rally after North Korea refrains from launch

Marco Green
September 13, 2017

NEW YORK, Sept 11 (Reuters) - A global equity index and the S&P 500 surged to record highs 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.

The U.S. stocks rally was broad, with the ratio of S&P 500 shares that were rising relative to those that were falling at the highest in three months.

The powerful storm made landfall in South Florida on Sunday morning after rolling through the Caribbean.

In Europe, Germany's DAX was up 1.1 percent at 12,435 while the CAC 40 in France rose 1.1 percent to 5,167.

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 USA economy and simmering tensions with North Korea. Eastern time. The Dow Jones industrial average gained 29 points, or 1.2 percent, to 22,057.

TECH ADVANCES: Technology companies helped lead the way. Insurers and travel companies did well in USA markets Monday, while home improvement stocks declined on expectations of less business from storm repairs.

Higher U.S. Treasury yields also bolstered the dollar, as the benchmark U.S. 10-year note yield rose to 2.135 percent from its close of 2.125 percent on Monday, and 2.061 percent on Friday.

Investors were relieved as Irma, which is still deluging Florida and Georgia, didn't appear to be as bad as it did in projections last week.

The pound edged up 0.1 percent to $1.3175 after losing 0.25 percent on Monday.

HCI Group jumped $5.28, or 17.2 percent, to $36.05 while Heritage Insurance gained $2.14, or 22.8 percent, to $11.51. Travel booking site Priceline rose $24.61, or 1.3 percent, to $1,863.18. The pound's rebound from its post-Brexit vote lows is potentially negative news, however, for British firms that have big business interests outside the U.K. And the money they make overseas will be worth less when it is brought back to the U.K. That helps explain why the FTSE 100 index of leading British firms, which is made up of main worldwide companies like BP and Burberry, was a laggard.

Stock markets rallied on Monday on receding concerns over North Korea and Hurricane Irma, analysts said.

Investors are so focused on the hurricane and the Federal Reserve's potential monetary tightening that they are missing the enormous boost the weaker dollar and low interest rates will give the USA economy, said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis.

European equities then took the baton, with both Frankfurt and Paris posting gains of more than 1.0 percent.

However, it bounced back on Monday, surging above 108 yen from Friday's 10-month lows.

- Britain's 10-year yield increased five basis points to 1.04 percent.

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.

On oil markets, U.S. prices rose modestly after taking a beating Friday caused by Hurricane Irma threatening crude supplies.

Spot gold dropped 1.4 percent to $1,327.40 an ounce.

- Gold sank 1.1 percent to settle at $1,335.70 an ounce for the biggest tumble in two months.

Other reports by Click Lancashire

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