US stocks hit record highs
A late PS: America’s S&P 500 index has closed at a new all-time high tonight.
The S&P 500 gained 1.1%, or 26 points, to 2,488.11 points, led by insurers, other financial firms, and tech stocks. The Dow Jones posted its biggest one-day jump since March.
The rally was driven by relief that Hurricane Irma appears to have caused less damage than the worst-case scenarios.
Marketwatch’s Barbara Kollmeyer sums up the day:
Wall Street optimism was underpinned by Hurricane Irma delivering a less forceful hit on Florida than expected and North Korea failing to conduct another nuclear missile test over the weekend, reviving investor appetite for assets perceived as risky, such as equities.
But...Irma has still caused terrible damage to areas such as the Florida Keys, where homes have been destroyed and people are left without power and water. In Miami, roads have been turned into rivers, even though the eye of the storm missed the City.
And we still don’t know the final death toll. Associated Press reports that 41 people have been killed since Irma first struck the Caribbean.
BREAKING: Authorities report 2nd Georgia death related to #Irma; total storm death toll is 41. @AP's storm stories: https://t.co/8Pp1hhtVwa
— AP South U.S. Region (@APSouthRegion) September 11, 2017
Afternoon summary: Relief rally sends stocks to alltime highs
And finally, European stock markets have closed in a flurry of green electronic ink, as today’s relief rally runs its course.
Every major indices has risen today, thanks to two factors; the absence of fresh missile tests from North Korea, and signs that Hurricane Irma’s total damage will come in below forecasts.
In London, the FTSE 100 finished 0.5% higher at 7413, a one-week high, up 35 points. In New York the Dow Jones Industrial Average is currently up 233 points, or just over 1%, at 22,033.
That means world markets, as measured by MSCI, are at all time highs as London’s financial sector winds down for the day.
Insurance companies continued to recover today - with Lancashire Holdings jumping by 10% in the City, and larger firms also recovering.
David Madden of CMC Markets credits the latest news from Florida:
The timing of Hurricane Irma wasn’t great seeing as it quickly followed the tropical storm Harvey. Irma was downgraded to a tropical storm, and even though it has caused a considerable amount of destruction, it hasn’t been as bad the markets were expecting. This also added to the bullish sentiment today, since the cost of the clean-up will be less than expected.
Insurers like Aviva, Prudential and Legal & General are all higher today as the payouts relating to Irma are likely to be below initial estimates.
The situation in Florida remains very serious, of course, with some officials warning of a potential “humanitarian crisis” following the massive hurricane.
But in the financial markets, orange juice and cotton future prices are recovering on hopes that the economic damage will be containable..
Chris Beauchamp, chief market analyst at IG, says there was a “buying frenzy” - although London’s rally was held back because the pound has rallied 0.5% agains the euro.
Beauchamp adds:
Today’s price action marks a step change from a week ago, when fears of conflict on the Korean peninsula drove equities lower.
Now normal service has apparently resumed, with triple digit gains on the Dow and the Dax. The FTSE is making heavy going of it, however, as sterling continues to gain ground versus the US dollar. The pound shows little nervousness so far ahead of a big week for UK data, and even the prospect of voting on the government’s EU withdrawal bill has not deterred the buyers.
The debate around that bill is raging now:
So that’s a good moment to wrap up. Thanks for reading and commenting. GW
Updated
The rally on the US stock market has legs; every sector on the S&P 500 index is now up on the day, with insurance firms leading the charge.
Orange juice futures contracts are dropping, as traders respond to signs that Irma’s won’t cause as much damage to Florida’s citrus industry as feared.
OJ futures are down 3% today, but that still means they are 9% more expensive than a week ago.
Florida is the world’s second-largest orange producer, so the hurricane damage to crops will have a knock-on impact on prices.
Wall Street’s rally is pushing world stock levels to fresh record highs.
MSCI’s All Country World Index is now up 0.75% today at 483.12 points, a fresh record level.
The All Country World Index tracks around 2,400 stocks traded in 47 countries, so is a good gauge of equity levels around the world.
Dow up over 200 on relief Irma damage not as bad as feared, S&P 500 $SPY and NASDAQ trading above their record closes.
— Bob Pisani (@BobPisani) September 11, 2017
Relief rally reaches America
After a minute’s silence to mark 9/11, trading is underway on Wall Street.
And shares are rallying, matching today’s gains in Europe and Asia.
The Dow Jones index has gained 163 points, or 0.75%, with nearly every share rising.
Travel firms such as Royal Caribbean Cruises and Carnival are among the top risers, reflecting hopes that Hurricane Irma will not be quite as severe as feared.
Financial stocks and tech companies are also leading the way higher.
The US dollar is also in favour, gaining almost 0.5% against other currencies today.
Newsflash: Google has launched an appeal against the €2.4bn fine imposed by the European Union in June for abusing its dominant position in the search engine market.
JUST IN: Google appeals EU antitrust fine pic.twitter.com/WXqRAXGFSc
— Reuters Business (@ReutersBiz) September 11, 2017
The uncertainty over Britain’s exit form the EU hasn’t shaken London’s status as a financial powerhouse, according to a new report:
The British pound is creeping higher this morning, as traders prepare for an influx of data later this week - and an interest rate decision.
Sterling has nudged $1.321 against the US dollar, close to a five-week high.
Tomorrow, the UK inflation rate is expected to rise to 2.8%, from 2.6% in July. That might refocus minds at the Bank of England about the possibility of raising borrowing costs from their current record low.
The BoE meets on Thursday; the City doesn’t expect a hike, but policymakers could hint that rates will rise faster than economists expect.
Shares are expected to rally in New York, when trading begins in 90 minutes time.
Dow futures jump more than 100 points after Irma not as bad as feared; insurers, airlines jump https://t.co/LUgYTjE6LH
— CNBC (@CNBC) September 11, 2017
Rising share prices seems like an odd reaction to the devastation caused by Irma in the Caribbean and in Florida. But Wall Street had been bracing for even more damage.
Our Hurricane Irma liveblog explains that Florida dodged a bullet:
Florida can thank Cuba, where it did hit as a Category 5 storm, said Maue and Jeff Masters, meteorology director for Weather Underground.
Irma would probably have hit Florida as a Category 5 hurricane if it had missed Cuba, Masters said.
The storm briefly trekked over Cuba’s low populated coast Friday evening through Saturday afternoon. That weakened Irma enough that when upper level winds from the west eroded some of the storm’s top and also blew in dry air, it had the combined of effect of making Irma more ragged, Masters said. It was at that point, he said, that Irma’s southwest eyewall sort of came apart, no longer a perfect circle on satellite imagery.
Slightly weakened from Cuba, the storm got caught up in competing weather systems a little longer, delaying its northward right turn into Florida. And that delay pushed the track further west, making it more of a threat to Florida’s west coast than its east.
Pictures: Celebs turn out for BGC Charity Day
Cantor Fitzgerald and its affiliate, BGC Partners, are holding their annual Charity Day, raising money for a wide range of good causes.
The Charity Day was set up to remember the 658 Cantor Fitzgerald workers, and 61 employees of Eurobrokers employees, who died in the terrorist attacks on September 11, 2001, 16 years ago today. Cantor’s New York headquarters was based in the North tower of the World Trade Centre.
Cantor and BGC distribute 100% of their global revenues on Charity Day to the Cantor Fitzgerald Relief Fund and dozens of charities around the world.
Over in Canary Wharf, a steady stream of celebrities - and the Mayor of London - have been raising money by trying their hand at trading....
Updated
The latest word from Florida is that 5.78 million homes are currently without power, or almost 60% of the state.
But despite this disruption, there is relief that Irma has weakened since making landfall, and may not wreck as much havoc as some experts estimated.
Daiwa Capital Markets strategist Chris Scicluna said (via Reuters):
“The good news was that the eye of Hurricane Irma took a path west of Miami and has since weakened to a Category 1 storm so that damage in Florida – whilst still severe... appears not to be quite as catastrophic as had been feared last week.
And thankfully there was no bad weekend news out of North Korea either.”
Here’s the latest:
North Korea’s president can take the credit for today’s market rally, says Joshua Mahony of City firm IG:
On a day that is largely devoid of any major economic releases of note, it is Kim Jong-Un who provides the unlikely source of bullish sentiment evident throughout global markets this morning.
With North Korea celebrating the anniversary of the nation’s formation over the weekend, it has come as a surprise that we did not see a third consecutive weekend test from Kim Jong-Un.
But this morning’s optimism could be tempered by a meeting of the United Nations later today, when the UN will vote on whether to impose new sanctions on North Korea.
Mahony explains:
Given that North Korea has provided one of the main drivers of volatility in recent weeks, today’s UN meeting over the potential implementation of further sanctions on the country will be crucial in gauging how likely we are to see further tests in the near future.
With the US pushing for an oil embargo on North Korea, the Chinese and Russian decisions will be key, where their cooperation would be a kick in the teeth for Pyongyang leadership, sparking a likely military response.
MSCI World index hits new record high as Irma weakens pic.twitter.com/ZHZ4WmZHSp
— Mike Dolan (@reutersMikeD) September 11, 2017
World stock markets hit all-time high
Newsflash: World stock markets have just hit a record high.
Shares are continuing to climb in Asia and Europe, on relief that North Korea didn’t conduct another missile test last weekend.
Hopes that Hurricane Irma will be less devastating than feared are also pushing equities higher, with insurance companies among the top risers today (as mentioned earlier).
Munich Re, one of the world’s biggest reinsurance firms, are up over 4% this morning.
The All Country World Share Index calculated by data firm MSCI has gained 0.35% to 481.25 points, helped by today’s gains in Asia and Europe.
In London, the FTSE 100 is now up 53 points at 7431, a one-week high.
Rebecca O’Keeffe, Head of Investment at Interactive Investor, says the City is less worried about North Korea as economists try to assess the full impact of the hurricane season.
”Equity markets are staging a relief rally after a less painful weekend than feared. Despite the fact that North Korea is now warning of ‘pain and suffering’ if the UN council votes for new sanctions today, investors have largely decided that the risks are more rhetoric than reality. Although Irma is still causing some problems, the impact is far less than the worst-case scenario predictions, with insurance companies topping the performance tables today as the direct financial cost of Irma is likely to be far less than feared.
“Nevertheless, the insurance costs of this year’s hurricane season are just one small part of the overall impact of Harvey and Irma, with investors and analysts now trying to work out who could be the big winners and losers from this year’s savage weather. Rebuilding and reconstruction are likely to be a central theme over coming weeks with the DIY and construction industries likely to be beneficiaries. Demand for new automobiles could be affected substantially by their growing susceptibility to damage from floodwater. Oil and oil product markets remain volatile as the knock-on effects of both Harvey and Irma may affect demand and supply for some time to come. Florida is also a key supplier of agricultural produce to the US and wider market, not least orange-juice.
“It is likely that the overall impact of the hurricane season will negatively affect US Q3 GDP, but boost Q4 and Q1 as the rebuilding effort gets into full swing. On the flip side, near-term inflation is likely to rise, not least as a result of higher gasoline prices. The combination of these two contrasting impacts leaves the Federal Reserve with an interesting dilemma over the remaining months of the year.”
Updated
Bailout monitors return to Greece as PM charms China
Over in Greece technical teams of auditors representing the debt-stricken country’s creditors are flying in to prepare the ground for what officials are hoping will be a last and problem-free bailout review.
Helena Smith reports from Athens
What amounts to the beginning of a third bailout review begins on a very different note.
The Greek prime minister Alexis Tsipras wants the compliance audit to be wrapped up imminently, telling delegates attending the international Thessaloniki trade fair this weekend that his leftist-led administration wants it completed “with great speed.”
In his annual speech outlining the economic policies his government will adopt, Tsipras emphasised what he had repeatedly said during the French president Emmanuel Macron’s visit to Athens last week: that “Greece is turning a page” with growth and development after seven years of recession.
Tsipras insisted that “Grexit” - ejection from the eurozone - had been replaced by “Grinvest”, as investor interest, the key to combatting unemployment, had surged.
It is a far cry from the days when the young leftist firebrand vowed to stop the sell-off of Greece.
China was the guest of honour at this year’s Thessaloniki fair, with more than 160 Chinese firms represented. Tsipras opened his speech saying Chinese investors were “welcome” in Greece.
Foreign investment, he said, was vital to tackling joblessness, with youth unemployment still running at 40% in Greece. It could also help ameliorate the brain drain that had seen the best minds leave since the country’s great economic crisis began.
The government hopes that the latest review will be concluded by December so that Athens can successfully exit its current bailout program on time next August. In private, however, officials are voicing fears that creditor demands may get in the way.
Troubled construction company Carillion has suffered fresh upheaval; Zafar Khan, its group finance director, has left the Company with immediate effect.
Shares in Carillion are down almost 5%.
Khan’s departure comes two months after Carillion shocked the City with a big profits warning, partly due to problems with three public-private partnerships.
Gold has lost its appeal this morning, as traders pile into riskier assets.
Bullion has dropped by around 1%, or $20 per ounce, to $1,335.
This morning’s risk-on mood is also giving the US dollar a lift.
Ipek Ozkardeskaya of London Capital Group writes:
The US dollar rebounded at the open. The greenback gained against all of its G10 counterparts, except the Canadian dollar, as Hurricane Irma weakened after hitting Florida over the weekend.
Risk-on: $USD, stocks rebound $DAX (+0.82%) $CAC (+0.98%) gain as $EUR, core Eurozone bonds slide$Yen $gold downhttps://t.co/CKyhjWQv9h pic.twitter.com/eFE5x0Jn7X
— Ipek Ozkardeskaya (@IpekOzkardeskay) September 11, 2017
Greenpeace says today’s offshore wind auction is a historic moment for green energy
Morning! You’re waking up to a historic day for UK offshore wind power. Price has dropped over 50% in 2 years - much cheaper than nuclear! pic.twitter.com/7yCmXr6dLM
— Greenpeace UK (@GreenpeaceUK) September 11, 2017
Emma Pinchbeck of Renewable UK, a trade body, has also hailed the low price of Britain’s offshore wind farms:
Offshore Wind just delivered the closest thing to an energy sector mic drop: offshore, onshore wind and solar are cheaper than gas & nukes
— Emma Pinchbeck (@ELPinchbeck) September 11, 2017
Huge boost for renewables as offshore windfarm costs fall to record low
It’s early, but the renewable energy industry may be tempted to crack open the champagne.
A new UK government auction has just shown that the price of producing offshore wind power has dropped dramatically, bolstering the case for investing in green energy rather than nuclear.
Wind developers bid aggressively for the latest government subsidies in the auction, with the winning bidders committing to building new windfarms for as low as £57.50 per MWh.
In comparison, Britain’s new nuclear power station at Hinkley point will cost £92.50 per MWh, and take two years longer to build.
My colleague Adam Vaughan explains:
As well as a major boost for renewables in the UK, which have suffered from government subsidy cuts in recent years, today’s auction will fuel a debate over whether ministers should rethink their commitment to new nuclear power to meet the country’s carbon targets.
The Green party said the results should sound the death knell for Hinkley Point C,which is currently being built by EDF in Somerset.
Here’s the full story:
Europe’s equity markets are all comfortably higher this morning, as geopolitical worries ease.
City investors are hoping that Hurricane Irma may not cause quite as much economic destruction as feared.
Insurance company shares are rising in early trading. Bermuda-based Lancashire Holdings has jumped by 6.7%, while Beazley (which runs several syndicates at Lloyds of London) are up 5.7%.
Before the storm hit Florida, insurance companies were bracing for bills of up to £150bn.
Naeem Aslam of Think Markets explains:
Investors are feeling somewhat relieved today after the most dire predictions in terms of a disaster caused by Hurricane Irma have evaporated. The damage caused by Hurricane Irma is still colossal as streets have been changed into rivers and nearly 3 million people are without any power.
However, thankfully, the overall impact of Irma is falling short of prediction. It is important to keep in mind that the full damage picture will still be colossal.
Updated
The agenda: Stocks rally as North Korea refrains from missile tests
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Stock markets are rising this morning, on relief that last weekend passed without another provocation from North Korea.
Britain’s FTSE 100 has popped back over the 7,400 mark for the first time in a week, up 35 points in early trading. Other European equity indices are rising too, following a solid session of gains in Asia.
Japan’s Nikkei jumped by almost 1.5%, with Hong Kong and South Korea close behind:
Asia stocks start the week higher in risk-on mood w/ Yen weaker, Treasury ylds rising as Irma weakens & UN to vote on oil embargo of N Korea pic.twitter.com/tZAHHjmUAB
— Holger Zschaepitz (@Schuldensuehner) September 11, 2017
Fears that North Korea would mark its 69th anniversary with another nuclear test proved unfounded ; instead Pyongyang restricted itself to more traditional celebrations.
Associated Press explains:
North Koreans observed the country’s 69th founding anniversary with celebrations that included laying flowers and bowing at statues and portraits of past leaders. But Pyongyang did not carry out another test of its developmental intercontinental ballistic missile, as South Korea’s government had warned it might do. Attention now moves to the United Nations, where the United States has called for a vote later Monday on new sanctions.
Mike van Dulken of Accendo Markets says investors have regained their risk appetite.
There is a positive start to the new trading week after North Korea avoided further provocation during its Founding Day celebrations (despite US calls for a ban on selling it oil/gas, a clear attempt to get China to help more)....
Also coming up today
Insurance companies will be starting to count the cost of Hurricane Irma, as the mega storm continues to blast its way through Florida.
Irma is currently heading for Tampa Bay, leaving more than three million US homes without power behind it. Experts fear that a storm surge at high tide could bring even more damage.
And we’ll be watching disgraced PR firm Bell Pottinger, which could drop into administration this week following the scandal of its “economic apartheid” campaign in South Africa.
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