Stocks Gain, U.S. Dollar Rebounds as Irma Weakens

Asian stocks rose along with U.S. equity futures and the dollar rebounded from its lowest in more than two years, after hurricane Irma struck the U.S. with less force than once feared, paring estimates for economic damage.

Japan’s Topix index was headed for its biggest gain in more than three months as a weaker yen gave a boost to exporters. S&P 500 Index futures jumped 0.5 percent and Treasuries fell, after Irma, the second devastating storm of the season, didn’t reach the feared Category 5 and looks to have spared Miami. Oil advanced as Gulf Coast refining capacity continued to recover after getting hit by Harvey. Risk appetite was also fanned by North Korea refraining from an expected missile test at the weekend.

Pyongyang warned of retaliation if the UN Security Council approves harsher sanctions, in a Monday vote, over its recent nuclear test. The regime “is closely following the moves of the U.S. with vigilance,” the North’s state-run Korean Central News Agency said Monday. Even so, some investors are looking for an eventual diplomatic resolution to the tensions that have whipsawed global assets since the start of August.

With Federal Reserve speakers now in a blackout period before next week’s policy meeting, the focus this week is on assessing the impact of natural disasters on U.S. growth. New York Fed President William Dudley said in an interview last week with CNBC that he had marked down his third-quarter growth estimate “a touch,” while reiterating that interest rates “are going to move gradually higher over time.” U.S. retail sales and inflation data are also due this week.

Here are the main moves in markets:

Stocks

· The Topix index advanced 1.2 percent as of 2:17 p.m. Tokyo time, on course for its steepest advance since early June. South Korea’s Kospi index was up 0.7 percent and the S&P/ASX 200 Index in Sydney also added 0.7 percent.

· Hong Kong’s Hang Seng Index rose 0.9 percent, while gauges in China fluctuated.

· Futures on the S&P 500 Index climbed 0.4 percent. The underlying gauge fell 0.2 percent on Friday.

· The MSCI Asia-Pacific Index jumped 0.6 percent to hit the highest since December 2007.

Currencies

· The yen fell 0.5 percent to 108.37 per dollar.

· The euro lost 0.2 percent to $1.2010.

· The Aussie was at 80.53 U.S. cents, down 0.1 percent.

· The Bloomberg Dollar Spot Index rose 0.2 percent. It lost 1.5 percent last week, its worst week since May.

· The offshore and onshore yuan declined after China’s central bank was said to have removed a reserve requirement on the trading of foreign-exchange forwards and the PBOC set its daily fixing at a weaker-than-expected level.

Bonds

· The yield on 10-year Treasury notes climbed almost four basis points to 2.09 percent.

· Australian 10-year bond yields rose about four basis points to 2.61 percent.

Commodities

· West Texas Intermediate crude added 0.9 percent to $47.91 a barrel in early trading after losing 3.3 percent on Friday.

· Gold declined 0.7 percent to $1,337.66.

Source: Bloomberg

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