Markets and currencies are stronger after the effects of two major impending threats weakened. North Korea did not conduct another missile test at the weekend. It was expected to do so on the anniversary of the founding of the country. Hurricane Irma weakened in force as it moved up the coast of Florida. The damage it caused was not as severe as was expected.
The absence of a further North Korean missile resulted in record high share prices worldwide. It also resulted in a rise in the dollar Monday. The weakening of the force of hurricane Irma resulted in a reduced demand for safer investments. Until yesterday and this morning, the hurricane has caused a great deal of damage on the coast of Florida and left over 3 million businesses and private homes without electricity.
The failure of Pyongyang to carry out further contentious tests led to great sighs of relief. The result of this was a rise in the dollar and an increase in stock prices.
The US dollar rose by 0.5% against the safe haven Japanese yen and increased in value against the euro and other popular currencies. 10-year Treasury note yields increased to 2.09% – a 3 basis points increase. There was also a 0.5% rise in E-Mini futures for the S&P 500 Esc1.
The nation of North Korea was created on 9th September 1948. The Korean War came later when North Korea invaded South Korea in June 1950. While the North gave signs that there may be another missile test on Saturday, none was. The world breathed a sigh of relief. Any drop in currency value or share prices because of this was recovered by Monday.
South Korea’s main index rose by 0.8%. After Hurricane Irma lost its strength, the European STOXX gained 0.75%. Although the issue of North Korea’s nuclear and missile tests is still apparent, markets appear to believe that the situation is unlikely to deteriorate.
Markets and currencies have now by and large regained what was lost during the Korean nuclear bomb test and the latest missile test over Japan. It’s not quite business as usual, but the main economic effects of that and Irma have largely recovered. Hurricane Irma has lost much of its force, changing from Category 5 to Category 1 when it reached Miami.
The two major reasons for markets and currencies to lose value over the past several days have now receded. North Korea is no more a threat than it has been, and Hurricane Irma is quickly blowing out. However – these dangers will recur and steps should be in place to counter them.