London: World shares returned to a record high on Monday, on relief that hurricane Irma looked to be losing strength in the United States and that North Korea’s anniversary celebrations at the weekend passed without any new missile test.

MSCI All Country World Index, which tracks roughly 2,400 stocks in 47 countries, climbed to its latest peak as Europe’s insurers rose more than 2 per cent on hopes Irma’s damage would not prove as costly as feared.

Wall Street opened sharply higher on Monday on relief that Irma weakened to a tropical storm and North Korea did not conduct a nuclear test over the weekend as feared.

The Dow Jones Industrial Average rose 157.28 points, or 0.72 per cent, to 21,955.07. The S&P 500 gained 15.36 points, or 0.62 per cent, to 2,476.79. The Nasdaq Composite added 53.37 points, or 0.84 per cent, to 6,413.56.

Irma caused a number of deaths and knocked out electricity to 3 million homes and businesses on its way up the Florida coast. But as the start of US trading neared, it had weakened to a tropical storm and was expected to slow to a tropical depression by Tuesday.

The relief over North Korea and a weaker yen had also given Tokyo its best session since June in Asia, as investors began to lose their appetite for safer assets like gold and US Treasuries.

Winning a reprieve from risk aversion, the dollar registered its biggest gains in the currency markets in 10 days.

It added 0.5 per cent against its perceived safe-haven counterpart, the Japanese yen, and regained ground against the high-flying euro as a top ECB policymaker cautioned against the single currency’s recent rise.

“The fact the worst-case scenario for Hurricane Irma hasn’t happened and that North Korea managed to get though its national day without sticking two fingers up at the rest of the world has helped ratchet the tensions down,” said CMC Markets senior analyst Michael Hewson. “So I think we are going to see the S&P and the Dow gap higher on the open.” Japan’s Nikkei had risen 1.4 per cent after Pyongyang held a celebration to congratulate the nuclear scientists and technicians who steered the country’s sixth and largest nuclear test a week earlier.

The United States and its allies had been bracing for another long-range missile launch to mark the 69th anniversary of North Korea’s founding on Saturday.

The sense of relief lifted E-Mini futures for the S&P 500 by 0.5 per cent, while yields on 10-year Treasury notes rose 3 basis points to 2.09 per cent, after barely budging in European trading.

South Korea’s main index added 0.8 per cent, while MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.4 per cent.

“It’s too early to say the (North Korean) risks are gone, but one thing for sure is that market players now think the situation won’t get worse as it did some weeks ago,” said Lee Kyung-min, a stock analyst at Daishin Securities in Seoul.

Lee said many foreign investors and domestic institutions were purchasing South Korean tech and chemicals shares as quarterly earning season neared.

The UN Security Council is set to vote on Monday on a watered-down US-drafted resolution to impose new sanctions on North Korea over its recent nuclear tests, diplomats said. It was unclear whether China or Russia would support it.

Oil

Oil prices regained ground after the Saudi oil minister discussed the possibility of extending a pact to cut global oil supplies beyond March 2018 with his Venezuelan and Kazakh counterparts. The news of the talks on Sunday helped offset the downward pressure on oil prices amid worries that energy demand would be hit hard by Hurricane Irma. US crude was trading 20 cents firmer at $47.68 a barrel, while Brent slipped 24 cents to $53.50.

Dollar recovery pushes gold down from one-year high

Gold prices fell on Monday from the previous session’s 13-month high as relief that North Korea did not conduct a missile test over the weekend helped to lift global stocks, the US dollar and bond yields. Demand for safer assets, including gold, also weakened after storm Irma wreaked less damage than feared in Florida.

Spot gold was down 0.9 per cent at $1,334.86 an ounce by 13:53 GMT, on track for its biggest one-day drop since July 7. On Friday it touched $1,357.54, the highest since August last year. US gold futures for December delivery were down 0.9 per cent at $1,339.20.

Gold had been lifted last week by fears of a North Korean missile launch and the impact of Irma on the US economy, helping to drive the dollar to its weakest since January 2015 and US bond yields to 10-month lows.

“Both of these events failed to materialise in a major way,” said Saxo Bank analyst Ole Hansen. “The short-term stage has been set for some consolidation (in gold prices). Much depends on where the dollar and bonds decide to go.”

A stronger dollar makes gold more expensive for holders of other currencies, potentially reducing demand, while higher bond yields increase the opportunity cost of non-yielding bullion.

— Reuters