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Havens lose lustre as North Korea missile test fears subside

A relief rally.

Investors had been bracing for North Korea to test a missile to mark the country’s founding day over the weekend, but Pyongyang opted instead to hold a celebration.

Relief is evident on global markets, boosting stocks and the dollar and taking the shine off haven assets, but there is still and air of caution, not least as investors keep wary watch on the impact of hurricane Irma on the US.

Haven assets are weaker. Gold is down 0.9 per cent to $1,335 an ounce, while the yen is 0.7 per cent weaker at ¥108.56 per dollar. The Swiss franc is 0.7 per cent weaker against the dollar at SFr0.9511.

The Euro Stoxx 600 is up 0.5 per cent, Frankfurt’s Xetra Dax 30 is 0.7 per cent higher and London’s FTSE 100 is up 0.4 per cent, held back by a sluggish showing for precious metals stocks. Randgold Resources’ stock is down 1.5 per cent. Fresnillo is down 2.1 per cent.

South Korea’s Kospi Composite is 0.7 per cent stronger while Japan’s Topix climbed 1.2 per cent. Hong Kong’s Hang Seng index is up 1 per cent with all sectors rising and financials gaining 1 per cent. Australia’s S&P/ASX 200 is up 0.7 per cent.

The dollar index, a measure of the US currency against a weighted basket of peers, rose 0.2 per cent to 91.545 as concerns that Irma would hit Florida with the force of a Category 5 hurricane dissipated after it made landfall as a Category 4 storm.

‎As Paul Hatfield, global chief investment officer at Alcentra, part of BNY Mellon Investment Management, points out:

Barring more attention grabbing by Kim Jong Un this week, investors’ immediate focus will be on the impact of hurricane Irma and the devastation it has caused as taking some of the focus away from wider geopolitical events.

Expect more of the volatility in catastrophe bonds and insurance stocks we saw last week as events in Florida unfold. There is still plenty of liquidity in the system looking to take advantage of any dips in markets.

European insurance stocks are keeping their poise. The Euro Stoxx insurance index is up 1.6 per cent.

According to early calls from the futures market, both the S&P 500 and the Dow Jones Industrial Average will rise 0.5 per cent a piece in opening US trade.

The euro is down 0.3 per cent at $1.2005, with the pound off 0.1 per cent at $1.3188. Against the euro, sterling is up 0.2 per cent at $0.9100.

The renminbi weakened against the dollar following reports that China’s central bank had eased restrictions on shorting the currency. The offshore renminbi was 0.3 per cent weaker at Rmb6.5170 per dollar while the renminbi’s onshore rate was down 0.4 per cent at Rmb6.5082, easing from a 21-month high in the previous session.

The 10-year US Treasury yield, which moves inversely to price, is up 3 basis points at 2.09 per cent after hitting a nine-month low of 2.06 per cent on Friday.

Brent crude oil, the international benchmark, is up 0.6 per cent to $54.12 a barrel after falling 1.3 per cent on Friday on concerns Hurricane Irma would hit demand. West Texas Intermediate, the US marker, is 0.8 per cent higher $47.88 a barrel.