There was finally good news for markets across the globe as tensions about North Korea subsided. Despite a lot of posturing, the world’s most isolated State did not, in fact, go ahead with another nuclear test.
The other calamity that had markets nervous was the expected catastrophic damage from Hurricane Irma. Thankfully, Irma downgraded to a Category 4 hurricane as it made landfall in Florida, and was further downgraded to a tropical storm by Monday. While the damage done was considerable, it wasn’t as bad as was feared.
The relief could be seen the most in the Asian markets, which saw a huge rise to reach its highest in the last 10 years. The broadest index of the Asia-Pacific market outside Japan, the MSCI’s MIAPJ0000PUS went up 0.2% to reach its highest since 2007. The Japanese Nikkei (N225) also went up by 0.1%. The South Korean Kospi also saw an increase of 0.7%. Hong Kong’s Hang Seng wasn’t about to be left behind and it saw a gain of 1%.
The gauge which covers 47 of the world’s stock markets, the MIWD00000PUS, also went up to reach a 2-month record high.
The biggest highs were seen in the world insurance gauge, the MSCI’s World Insurer Index (MIWO0ISGUS), which went up a huge 1.5% on Monday. There was immense relief in the insurance sector directly attributable to the fact that the damage done by Irma was not as severe as feared.
In European markets, the German DAX went up by 1.4%, the CAC in Paris went up by 1.2%, and the London FTSE 100 Index went up by 0.5%.
Back home in the US, the S&P 500 (SPX) happily went up by a huge 1.1%, to close at another record high of 2,488.11. This is the index’s biggest gain since April earlier this year. The Dow Jones Industrial Average (DJIA) also jumped by 1.2% (259.58 points) to close at 22,057.37. The Nasdaq Composite Index wasn’t far behind either, with a 1.1% gain (72.07 points) to close at 6,432.26. The Nasdaq was just 3 points below the record high it achieved on September 1 this year. The index for smaller company stocks, the Russell 2000 also rose by 1.1% (15.40 points) to close at 1,414.83.
There was more good news as the insurance companies breathed a sigh of relief. There was a 17.5% surge for the HCI Group, taking its share prices to $36.15. Heritage Insurance went up 21.6% to touch $11.39/share. The larger insurance companies like re-insurer XL Group (up 5% to touch $40.55) and Travelers (up 2.3% to touch $122.56) also showed a positive trend.
The travel companies have also suffered a lot in the past few weeks because of hurricanes Harvey and Irma. So stock prices finally going up was also a godsend. Royal Caribbean Cruises went up 3.6% to reach $121.69. American Airlines, which was one of the hardest hit by the hurricanes, saw its stock prices go up 5.2% to reach $45.86. Priceline, the travel booking website, also saw a jump of 1.7% to close the day at $1,868.86.
Orange juice futures, which last week reacted with a huge price jump last week, were finally coming down. Last week, the futures had risen to a $1.54 per pound, going up sharply from the August closing of $1.30 per pound. The price has now come down a little to $1.51 per pound.
Gold finally fell for the first time since tensions started. The precious metal lost 1.1% (a $15.50 drop) to close at $1,335.70.
Analysts are calling this world-wide gain a relief rally.