Markets Rise After Irma Lands, North Korea Stays Quiet

By Marina Force Features Dow Jones Newswires

Global stocks and the U.S. dollar climbed Monday and haven assets retreated, as fears eased among investors about a standoff with North Korea and the impact of Hurricane Irma on the U.S. economy.

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In stock markets, the Dow Jones Industrial Average gained 173 points, or 0.8%, to 21971 shortly after the opening bell. The S&P 500 added 0.7%, and the Nasdaq Composite rose 1%.

The Stoxx Europe 600 moved 0.9% higher, led by gains in bank, insurance and technology shares -- sectors that post hefty gains whenever investors feel confident enough to take on more risk.

The WSJ Dollar Index, which measures the U.S. dollar against a basket of other currencies, rose 0.3%, after sinking to its lowest level in more than two years on Friday. The euro fell 0.3% against the greenback, paring some of last week's gains, to trade at $1.1998.

Some analysts expected North Korea to conduct a weapons test on Saturday, coinciding with the country's founding day, as it did last year to mark the celebration. The absence of news from Pyongyang, however, supported stocks and the dollar, while weighing on haven assets.

Tensions, though, could escalate if the United Nations approves fresh sanctions on North Korea later Monday.

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Kim Jong Un's government has warned the U.S. will pay "due price" for spearheading "the illegal and unlawful 'resolution' on harsher sanctions, " the state-run Korean Central News Agency said, citing a statement by the Ministry of Foreign Affairs.

U.S. officials are pushing the United Nations Security Council to ban Pyongyang's textile exports and embargo oil sales to the country.

"We go through certain episodes of brinkmanship. but ultimately, a doomsday scenario remains certainly remote," said Timothy Graf, head of macro strategy for Europe, Middle East and Africa at State Street Global Markets.

Meanwhile, concerns about the impact of Hurricane Irma on the U.S. economy also decreased, after it hit Florida on Sunday with the strength of a Category 4 storm, instead of a Category 5 hurricane, as many analysts feared. Although the National Weather Service said the extreme storm conditions would continue for much of central and western Florida, Irma weakened further Monday.

As a result, the 10-year Treasury yield edged up Monday to trade at 2.111% -- yields fall as prices rise -- compared with Friday's close of 2.058%, according to Tradeweb. Meanwhile, the 10-year German government bond was slightly higher at 0.331%, from 0.315% Friday.

"I think there is a real chance to see yields go back up there once the North Korean crisis subsides one way or another," said Brad McMillan Chief Investment Officer at Commonwealth Financial Network.

Gold, another traditional haven for money managers, fell 1.1%. The Japanese yen and the Swiss franc, which traditionally rise when markets seize up, both lost 0.7% against the U.S. dollar.

The weaker yen boosted Japanese blue-chip stocks, because investors measure the performance of these multinationals against revenues earned in foreign currencies abroad. The Nikkei 225 rose 1.4%, after setting fresh four-month lows on Friday and logging its worst week in seven months.

Elsewhere, South Korea's Kospi climbed 0.7%, and Australia's S&P/200 rose 0.7%.

In commodities, U.S. crude oil declined 0.6% to $47.16 a barrel.

As Federal Reserve speakers are now in a blackout period before next week's policy meeting, investors were awaiting for the U.S. Consumer Price Index, due out Thursday, for further cues on inflation. Traders were also anticipating U.S. retail sales and industrial production data expected Friday.

Ese Erheriene contributed to this article

(END) Dow Jones Newswires

September 11, 2017 09:53 ET (13:53 GMT)