Asian Stocks join global rally as investors breathe sigh of relief on Irma, North Korea

Asian stocks joined a global equities rally, hitting a 10-year summit on Tuesday with investors breathing a sigh of relief as North Korean fears eased slightly and the worst-case scenario from Hurricane Irma appeared to have been averted.

MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.1 percent to its highest level since late 2007. Japan’s Nikkei rose 1.0 percent.

On Wall Street on Monday, U.S. Samp;P 500 Index surged over 1 percent to a record high near 2,488 while MSCI’s broadest estimate of the world’s stock markets covering 47 markets hit a new record high, having made its biggest gains in about two months.

Insurers were among the biggest winners, with the MSCI World’s insurer index rising 1.5 percent on Monday, as insured property losses from Hurricane Irma’s are expected to be smaller than originally forecast.

Downgraded to a tropical storm early on Monday, Irma had rated among the strongest Atlantic hurricanes recorded. It cut electricity to millions of people and ripped roofs off houses as it hit a broad swath of Florida on Sunday and Monday and moved to neighbouring countries.

Adding to an uptick in risk appetite was relief that North Korea didn’t test-fire missiles or conduct nuclear tests over the weekend as some had feared.

The United Nations Security Council unanimously stepped up sanctions against North Korea on Monday over the nation’s sixth and most powerful nuclear test on Sept. 3, imposing a ban on the country’s textile exports and limiting imports of crude oil.

The steps were less intense than Washington’s first proposal and U.S. Ambassador to the United Nations Nikki Haley said the United States wasn’t searching for war with North Korea and that Pyongyang had “not yet passed the point of no return{}”

Investors also sold safe-haven assets like U.S. Treasuries.

The 10-year U.S. Treasuries yield jumped to 2.125 percent from 2.061 percent, the largest increase in a month and a half.

“The markets have been switching between optimism and pessimism. If U.S. bond markets fall further these days, it’s quite unusual to see them falling for 2 days in a row so we can state the most recent cycle of pessimism, which has lasted two weeks, may be coming to an end,” said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank Corp..

Sharp gains in U.S. bond yields also prompted buy-back from the battered dollar.

The euro dipped to $1.1958, retreating farther from Friday’s summit of $1.2092, which was its highest since January 2015.

The buck jumped back to 109.30 yen versus Friday’s 10-month low of 107.32.

Gold dropped to $1,325 per ounce, compared to Friday’s one-year summit of $1,357.4.

Oil prices held firm as crucial U.S. refineries began restarts following Hurricane Harvey, which might help revive crude oil processing.

The prospect of an expansion to the 15-month manufacturing pact between members of the Organization of the Petroleum Exporting Countries and non-OPEC manufacturers also helped to support costs.

Brent crude futures stood at $53.76 per barrel while U.S. crude stocks stood apartment at $48.04 per barrel, having climbed 1.2 percent on Monday.

Courtesy: The Globe And Mail

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