The dollar gained, Treasuries retreated and stocks advanced as an appetite for risk returned after an anticipated North Korean missile test failed to materialise and Hurricane Irma struck the US with less force than feared. Gold, the yen and the Swiss franc all fell.
Bloomberg’s dollar index was headed for the first increase in eight days, while US stocks rallied, Treasuries slipped and insurers jumped after Irma weakened and shifted direction to spare Miami a direct hit. The Stoxx Europe 600 Index climbed the most in more than three weeks as all the region’s major stock gauges advanced. Crude erased earlier gains on speculation that two major US hurricanes in the past three weeks would curb demand.
Pyongyang warned of retaliation if the UN Security Council approves harsher sanctions over its recent nuclear test in a vote on Monday. But speculation had mounted that the country would mark the anniversary of its founding with another missile over the weekend— and that didn’t happen.
“The better risk environment has seen Treasury yields move higher while the yen retreated,” Chris Scicluna, the head of economic research at Daiwa Capital Markets in London, wrote to clients. Hurricane Irma appeared “not to be quite as catastrophic as had been feared last week” and “thankfully there was no bad weekend news out of North Korea.”
Meanwhile, Federal Reserve speakers are now in a blackout period before next week’s policy meeting, so investors are likely to devote much of their attention to assessing the impact of natural disasters on US growth. While the most dire predictions about Irma seem to have been avoided, at least 5.6 million were without power, millions displaced and as much as 15 inches of rain were forecast in what may yet go down as one of the worst storms in Florida’s history.
US retail sales and inflation data are due this week. Brexit Secretary David Davis warned UK lawmakers that blocking the Repeal Bill could lead to a “chaotic” departure from the EU. The measure goes to a vote on Monday. The Frankfurt Motor Show is underway. Norway’s election is today. Apple Inc. will reveal its newest products on Tuesday, which will probably include new iPhones and a fresh version of the Apple watch. The Bank of England will almost certainly leave policy unchanged on Thursday, even though the UK inflation reading two days earlier may show a pickup. Also due this week, India’s trade surplus and China’s August industrial production, retail sales and fixed-asset investment.
The S&P 500 Index gained 0.8 percent to the highest intraday price in five weeks Giant reinsurers like Swiss Re and Munich Re posted their biggest gains of the year. The Stoxx Europe 600 Index jumped 1 percent as of 10 a.m. New York time to the highest in almost four weeks. The MSCI All-Country World Index climbed 0.8 percent to the highest on record. The MSCI Emerging Market Index increased 0.7 percent to the highest in three years.
The Bloomberg Dollar Spot Index gained 0.4 percent to 1,140.31, the first advance in more than a week. The euro declined
0.4 percent to $1.1991, the first retreat in more than a week. The British pound was little changed Mexico’s peso posted the biggest advance in emerging markets, climbing 0.3 percent. Gold sank 0.8 percent to $1,335.50 an ounce for the biggest tumble in 4 weeks.