Last week was a not-so-good week for Wall Street, with the US stock indexes closing with modest losses on Friday. Two main concerns looming over the market caused investors to trade cautiously – Irma and North Korea. Reports have been coming in that North Korea is planning another missile test. And Category 5 Hurricane Irma has also been causing a lot of stress in the market place.
Hurricane Irma had already caused immense devastation. There has been as much as 90% damage in all the islands of the Caribbean that were in its path; Barbuda and Saint Martin have been deemed uninhabitable, with almost 100% of the islands’ buildings destroyed as well as electricity and water supplies stopped. Antigua, Saint Kitts, Nevis, Saint Lucia, Dominica, Haiti as well as the Bahamas have all suffered similar damage thanks to Hurricane Irma. Cuba experienced its first Category 5 hurricane for the first time since 1924.
Reports say that Hurricane Irma has turned slightly westward, which is good news for Miami, but not so good for the Florida Keys, where the hurricane is expected to make landfall early Sunday morning. The Key are already experiencing storm surges and heavy rainfall. Almost half of Florida’s population has been asked to evacuate to safety.
With warnings of Irma being the worst ever storm to hit the state of Florida, the stock markets were slow on Friday. The Dow Jones futures lost 70 points (0.3%), to end the day at 21,700. The S&P 500 followed suit, going down 6.70 points (0.3%) to finish at 2,458. The Nasdaq 100 didn’t fare any better either, down 16.25 points (0.3%) and closed at 5,961.25. All the three indexes had a poor week. The Dow was down by 0.9% for the week. The S&P 500 was 0.5% lower for the week. And the Nasdaq Composite Index was down by 0.6% too. The dollar didn’t fare much better as it continued slipping on Friday too. The ICE dollar index fell 0.5% to reach 91.249. That’s the lowest it’s dropped to in 2.5 years.
Just two weeks ago, the Texan coast of the US was ravaged by Hurricane Harvey, which caused about $190 billion in damage. Experts are predicting that Irma is going to be even worse, with damages going up beyond $200 billion. This is because Florida’s coastline has some of the most expensive real estate in the country.
According to analysts, some sectors will be harder hit than others in the wake of Hurricane Irma. Insurance companies are expected to take the brunt of the damage. Already reeling from the insurance claims coming in after Harvey, the insurance companies are going to be swamped after Irma. Other sectors who stock values are expected to be hurt are the hospitality segment (hotels, restaurants, resorts, clubs, etc.), the travel industry (airlines are already getting impacted with tons of cancelled or delayed flights causing a huge loss of revenue), the telecom and cable sector (damage post the storm will cost telecom and cable companies a pretty penny in repairs and rebuilding infrastructure).
However, there is always a silver lining. There are other segments of the industry that are expected to see a rise in their stock prices as they will be outperformers after the storm. These sectors are those that are typically involved in rebuilding such as energy equipment and services and communication equipment and services. Distribution, air freight and trading companies are also expected to gain after the storm. And, of course, the biggest gainer will be construction. Lastly, a storm like Irma could also mean that insurance rates will go up in the future.