U.S. Stocks Climb to Record as Irma Threat Recedes: Markets Wrap

(Bloomberg) -- U.S. stocks rose to a record, the dollar strengthened and Treasuries tumbled as investors piled into riskier assets after Hurricane Irma wreaked less damage than forecast and North Korea failed to exacerbate tensions.

The S&P 500 Index jumped the most since April to close at its first record in a month and the Dow Jones Industrial Average topped 22,000. Bloomberg’s dollar index rose for the first time in eight days and 10-year Treasury yields climbed past 2.10 percent. European and emerging-market equities also advanced, while gold, the yen and the Swiss franc retreated.

Pyongyang warned of retaliation if the UN Security Council approves harsher sanctions over its recent nuclear test in a vote Monday. But speculation that the country would mark the anniversary of its founding with another missile over the weekend didn’t come to pass.

“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.”

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 VIX “fear gauge” saw its biggest decline in almost three weeks as financial and technology shares led gains.

Insurers jumped in markets from Europe to Florida, cruise-ship operators rallied and oil advanced amid signs that predictions about Hurricane Irma’s wrath were overdone. By one estimate, damages will total $49 billion instead of an earlier prediction of $200 billion. Still, almost 7 million were without power and millions were displaced in what may go down as one of the worst storms in Florida’s history.

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 U.S. growth.

Terminal subscribers can read more on our Markets Live blog.

The key events this week:

• U.S. retail sales and inflation data are due this week.
• Brexit Secretary David Davis warned U.K. lawmakers that blocking the Repeal Bill could lead to a “chaotic” departure from the EU. The measure goes to a vote Monday.
• The Frankfurt Motor Show is underway.
• 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 Thursday, even though the U.K. 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.
• Australia releases jobs data on Thursday.

Here are the main moves in markets:

Stocks

• The S&P 500 Index added 1.1 percent at the close to 2,487.96
• Giant reinsurers like Swiss Re and Munich Re posted their biggest gains of the year.
• The Stoxx Europe 600 Index jumped 1 percent to the highest in a month.
• Brazil’s Ibovespa surged to a record on speculation the government will succeed in pushing through measures to shore up fiscal accounts
• 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.

Currencies

• The Bloomberg Dollar Spot Index gained 0.5 percent for the first advance in more than a week.
• The euro declined 0.7 percent to $1.1952, the first retreat in more than a week.
• The Japanese yen sank 1.5 percent, the most since January, to 109.45 per dollar.
• Russia’s ruble posted the biggest advance in emerging markets, climbing 0.3 percent.

Bonds

• The yield on 10-year Treasuries rose eight basis points to 2.13 percent, the highest in a week.
• Germany’s 10-year yield climbed two basis points to 0.33 percent.
• Britain’s 10-year yield increased five basis points to 1.04 percent.

Commodities

• Gold sank 1.1 percent to settle at $1,335.70 an ounce for the biggest tumble in two months.
• West Texas Intermediate rose 1.2 percent to settle at $48.07 a barrel
• Base metals rebound from their biggest drop in 9 months.

--With assistance from Adam Haigh Min Jeong Lee Andreea Papuc Sid Verma and Lu Wang

To contact the reporters on this story: Brendan Walsh in New York at bwalsh8@bloomberg.net, Samuel Potter in London at spotter33@bloomberg.net.

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Jeremy Herron at jherron8@bloomberg.net.