Stocks set new highs as Irma, North Korea fears ebb
New York — The S&P 500 and a gauge of global equity markets hit new highs on Tuesday as the feared impact of Hurricane Irma waned and the easing of tensions with North Korea helped drive a sell-off in global bond markets.
The US dollar clung to its gains, helped by the bounce in government debt yields and ahead of US inflation data that could influence the timing of the next Federal Reserve interest rate hike.
European shares rose to a five-week high, extending the relief bounce seen in the previous session and Wall Street advanced, led by gains in financial and industrial stocks.
MSCI’s all country world stock index, which tracks more than 2,400 stocks in 47 countries, rose 0.26% after it jumped 0.9% on Monday, its fourth-biggest gain so far this year.
"There’s a relief factor, at least for the moment, that the North Korea situation has gone a little bit quiet and the fact that the hurricane over the weekend was not as bad as expected," said Dave Donabedian, chief investment officer of CIBC Atlantic Trust Private Wealth Management.
Investors also welcomed US Treasury Secretary Steve Mnuchin’s comments that he was hopeful for tax reform by year’s end with a "competitive" rate for businesses, even if not at the 15% bracket backed by President Donald Trump, he said.
The Dow Jones Industrial Average rose 65.07 points, or 0.29%, to 22,122.44. The S&P 500 gained 6.22 points, or 0.25%, to 2,494.33 and the Nasdaq Composite added 10.32 points, or 0.16%, to 6,442.58.
The pan-European FTSEurofirst 300 index rose 0.54% to close at a preliminary 1,499.27. MSCI’s index for emerging market stocks rose 0.27%. European insurance companies rose again, climbing 0.8%. The market mood was "risk-on," said Pierre Martin, a trader at Saxo Bank, adding the positive trend for banking stocks and automobile shares showed investors were keen on corporate and macroeconomic news rather than geopolitical and Irma worries.
US long-dated Treasury yields hit two-week highs, rising for a third straight session while Germany’s benchmark 10-year bond yield rose sharply and was set for its biggest daily rise since early July.
The benchmark 10-year US Treasury note fell 13/32 in price to yield 2.169%. In Germany, Bunds were last up 5 basis points in price to yield 0.396%.
The greenback found support as investors further unwound bearish bets against it. The dollar index, which tracks the currency against a basket of six major rivals, rose 0.04 percent while the euro rose 0.09% to $1.1962.
The Japanese yen weakened 0.62% versus the greenback at 110.10 per dollar.
Oil prices rose almost 1% after Opec said its output fell in August and forecast higher demand in 2018, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut.
Opec also said the two hurricanes that have hit the United States in recent weeks would have a "negligible" impact on demand.
US crude rose 0.42% to $48.27 per barrel and Brent was last at $54.22, up 0.71% on the day.