Stock markets around the world are rallying to start the new trading week. The Nikkei soared 1.4% while the Dax is up 1.1%. The FTSE and US index futures are up 0.5%.
The big news this morning has been that Hurricane Irma, while devastating, has not been as catastrophic as had had feared. The storm has already been downgraded to a Category 1 storm and is expected to be downgraded to a tropical storm later this morning. Millions of homes lost power but not as many as had been widely thought and while damages are likely to run into the billions, they are not likely to run anywhere near the more extreme pre-storm estimates.
Unlike Harvey, Irma is moving though rather than sticking around for days, so damage cleanup is likely to get going faster as well. Projections are suggesting what’s left of Irma could bring a lot of rain to the lower Great Lakes region toward the weekend.
From the no news is good news file, the street also appears to be responding favourably to the face that a major national holiday in North Korea came and went without a missile test or any other provocations.
Part of the rally in overseas indices may also be coming from a rally in the US Dollar which has knocked back Gold, EUR and JPY. GBP, on the other hand, continues to climb on indications that the big Brexit EU repeal bill currently in Parliament is likely to pass with a vote probable later today or early Tuesday. Lately, progress toward Brexit has been boosting the pound relative to the US Dollar and the Euro. Traders should note, however and if there were to be a surprise legislative setback, it could undermine the advance.
Energy markets continue to unravel storm related trades. With the impact of Irma on the US less than expected, fears of a big drop on oil demand have eased and trades related to China planning to close small refineries have also started to unwind. WTI is up 0.5% this morning while gasoline is down 1.2% as Texas continues to recover from Hurricane Harvey.