This week was dominated by the tragic impact of Hurricanes Irma and Harvey. At least 14 people lost their lives as Irma hit a number of Caribbean islands. Cuba and Florida were braced for its impact as the week drew to a close. Meanwhile, Texas and Louisiana are still dealing with the fatalities and environmental devastation wreaked by Hurricane Harvey, which claimed more than 70 lives.
As well as taking a terrible human toll, the hurricanes prompted anxiety about their impact on the US economy. Jobless claims were reported at their highest level in more than two years this week, with 62,000 more applicants than the week before. This was ascribed in large part to the effect of Hurricane Harvey on workplaces and livelihoods. The 10-year Treasury yields fell below 2.05% for the first time since last November, when markets were shaken by the election of Donald Trump.
Global equity markets were also rattled. In a week shortened by the US Labor Day holiday, the S&P 500 was down 0.5% by Thursday’s close. So too was the FTSE 100. The FTSE World Europe ex UK lost 0.2%. The weakest major market, however, was Japan. The Topix fell by 1.3%, the bulk of its decline coming on Monday. The previous Friday’s Mountain Day holiday had prevented Japanese investors from responding to the rising tensions on the Korean peninsula, so Monday’s sell-off was essentially a delayed reaction to last week’s sabre-rattling from Kim Jong-un and Trump.
Dancing with Draghi
In the currency markets, the euro rose to a two-and-a-half year high against the dollar towards the end of the week. This came after Mario Draghi, the president of the European Central Bank (ECB), said that it would have to take the euro’s recent strength into account in deciding when to begin reducing its asset-purchase programme. Eurozone inflation has been curbed by the stronger currency, which means that there is less pressure on the ECB to adopt a tighter monetary policy.
Eli Lilly shrinks staff; share price stiffens
In the US, drug-maker Eli Lilly announced that it was to cut some 3,500 jobs, amounting to 8% of its workforce. Most of the cuts will come through an early-retirement programme in the US. The company is coming under pressure because of the imminent expiry of its exclusive rights to Cialis, its flagship erectile-dysfunction drug. Its shares rose on news of the cuts.
Tech ticks up … and trips up
The market’s enthusiasm for the technology sector showed no sign of waning this week – in the UK at least. Technology was the strongest sector in the FTSE 100, which was led up Micro Focus, amid excitement about its acquisition of Hewlett-Packard’s software business. The story was slightly different in the US, though, as the Nasdaq fell back from the all-time high that it reached last week. The FANG stocks – Facebook, Amazon, Netflix and Google – continued to make gains, however. Whether the Nasdaq’s slide is just short-term profit-taking or a turning of the tech tide remains to be seen.
And finally …
You may be wondering how to fill the void until Game of Thrones next graces our screens. But don’t despair – nature offers undead dragons of its own. Nala, an eight-year-old bearded dragon living in Cheshire, was recently pronounced dead by a local vet. The lizard’s owner, Rachel Haspel, had already attempted CPR, but to no avail. So Nala was buried with due ceremony in the family garden.
As with Game of Thrones’ Viserion, however, death was not the end. Five weeks later, Nala appeared hale and hearty on the lawn. The scientific explanation was that the reptile had entered a hibernation-like state known as brumation. But we still suspect the involvement of the Night King.
There is no word yet as to whether Nala’s eyes have turned blue – or whether Ms Haspel has any designs on the Iron Throne.