U.S. Futures Fall on Missile; Gasoline Up on Storm: Markets Wrap

(Bloomberg) -- U.S. stocks futures slumped and the yen climbed after reports that North Korean fired a missile over Japan, heightening geopolitical tensions. Oil declined and gold broke through $1,300 an ounce as investors weighed the damage from Tropical Storm Harvey.

September contracts on the S&P 500 Index dropped 0.7 percent as of 6:04 p.m. in New York, while the yen strengthened through 109 per dollar. An exchange-traded fund tied to the equity benchmark, ticker SPY, lurched just after 5 p.m., losing about half a percent in five minutes, on news the missile probably landed off the eastern coast of Hokkaido, according to Japanese broadcasting service NHK.

Earlier, gasoline surged to the highest in two years and crude oil fell as flooding from Harvey inundated refining centers along the Texas coast, shutting more than 10 percent of U.S. fuel-making capacity. Insurers were among the biggest decliners Monday in the S&P 500 Index, with Travelers Cos. dropping 2.6 percent and Progressive Corp. down 2.3 percent.

The biggest share-price increases were at refiners with operations far from the Texas Gulf Coast that can take advantage of growing spreads without the risk of damage to their operations. Delek US Holdings Inc., HollyFrontier Corp. and PBF Energy Inc. each rose more than 6 percent Monday.

"The economic impact of Hurricane Harvey is still very hard to determine,” Matt Maley, an equity analyst at Miller Tabak & Co. wrote in a note to clients Monday. “It’s going to be a while before we know how much of an impact it will have. The ‘clean-up’ and ‘rebuild’ after these disasters actually have a positive impact on the economy in certain ways.”

Harvey’s cost could mount to $30 billion when including the impact of relentless flooding on the labor force, power grid, transportation and other elements that support the region’s energy sector, Chuck Watson, a disaster modeler with Enki Research, said in an email Monday. That would place it among the top eight hurricanes to ever strike the U.S. David Havens, an insurance analyst at Imperial Capital, said the final tally might be as high as $100 billion.

Terminal subscribers can read more on our Markets Live blog.

Among other key events looming this week:

• U.K. markets were closed for a public holiday on Monday.
• The U.K. is due to resumes Brexit talks with the European Union.
• Japan reports jobs data on Tuesday and retail sales figures on Wednesday.
• Hong Kong reports on retail on Tuesday, while Australia is due to publish data on Wednesday detailing construction work done.
• The U.S. updates second-quarter GDP and core price data on Wednesday, and reports on August payrolls on Friday.

And here are the main moves in markets:

Stocks

• Futures on the S&P 500 Index fell to 2,428 as of 6:04 p.m. in New York
• The Dow Jones Industrial Average slid 5.27 points to 21,808.40, while the Nasdaq Composite Index rose 17.37 points to 6,283.02
• The Stoxx Europe 600 Index fell 0.5 percent 
• The MSCI World Index of developed countries advanced 0.1 percent.

Currencies

• The Bloomberg Dollar Spot Index dropped 0.1 percent to 1,149.24, after touching the lowest in more than two years.
• The euro rose 0.4 percent to $1.1974

Bonds

• The yield on 10-year Treasuries fell one basis point to 2.16 percent.
• Germany’s 10-year yield was little changed at 0.38 percent.

Commodities

• West Texas Intermediate crude fell 2.5 percent to $46.69 a barrel.
• Gold gained 1.6 percent, closing above $1,300 an ounce for the first time since November
• Gasoline for September delivery futures rose as much as 6.8 percent before settling at $1.7101 a gallon on the New York Mercantile Exchange

Asia

• The Topix closed 0.2 percent higher, while South Korea’s Kospi index fell 0.4 percent.
• Australia’s S&P/ASX 500 Index declined 0.6 percent.
• The Hang Seng Index in Hong Kong rose less than 0.1 percent.
• The yen climbed 0.1 percent to 109.23 per dollar.

--With assistance from Sonali Basak and Kristine Owram

To contact the reporter on this story: Jeremy Herron in New York at jherron8@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka