Wednesday (6th September) saw an insignificant change in the US stock index futures. This is attributed to the high level of cautiousness by investors following a warning that an impending Category 5 Hurricane Irma, which has been described by NHC forecasters as a “potentially catastrophic”storm,could hit the US.
The NHC said Hurricane Irma was ranked as among the most powerful Atlantic hurricanes ever experienced in the last 80 years and the strongest in the Atlantic storm outside the Caribbean Sea and Gulf of Mexico.
This comes barely a week after Hurricane Harvey wreaked havoc in the city of Houston and East Texas by killing more than 60 people and causing damages to buildings, businesses and income loss all to a tune of $180 million.
In another sign of risk-averse mood, investors also rushed to cushion themselves from losses following the US and North Korea stand-off at the Korean Peninsula.This led to the S&P 500 nose-diving to new low in three weeks.
Ole Hansen, head of commodity strategy at Saxo bank says, “The market hates uncertainty and that’s what we have now.”
This is after North Korea went ahead to perform its most powerful nuclear test despite President Trump’s earlier warning that North Korea would face “fire and fury like the world has never seen” if it continued threatening the United States.
Mike Van Dulken, head of research at Accendo Markets said, “Equities are nursing losses thanks to an unwelcome escalation in geopolitical tensions between the US and North Korea, both trading awoken volatility from its slumber and seen risk assets shunned in favor of the traditional safe havens.”
Gold prices hit a record 11-month high while the bond market, the 10 year return hit a 10-month low on Tuesday. This is a move considered by many as a safe haven of choice for investors at a time of geo-political uncertainty.
Oil prices were observed to rise on Wednesday following a resuscitation where refineries, pipelines and ports which had been hit by the recent Hurricane Harvey restarted their operations bringing to a drop the prices of the commodity.
At 8:30 a.m. ET, a report is expected from the Commerce Department showing trade deficit widening to $44.6 billion in July from $43.6 billion in June. Expected also, is a report from the Institute for Supply Management at 10:00 a.m. ET on non-manufacturing index of the month of August.
The Federal Reserve is also expected to issue its Beige Book at 02:00 p.m. ET. (1800 GMT), a briefing on the state and situation of the economy following the recent happenings. This, according to experts will give a measure and degree of the robustness of the economy following the recent major disruptions to it.
Tuesday saw three Federal Reserve policy makers downplay the possibility of rate increments, with at least one calling for a shelving of the interest rate increment until the Federal Reserve is assured of a rebound in inflation.