Markets drop as New York battens down the hatches
LONDON -- Markets started the week on a downbeat note as investors fretted over the cost of a mammoth storm that was heading towards the eastern U.S. and prompted the closure of Wall Street on Monday.
Much of the East Coast, including New York and Washington D.C., were coming to a standstill as millions of people prepared for the arrival of Hurricane Sandy, which is due to make landfall later in the day and converge with two other weather systems.
Authorities on Wall Street confirmed Sunday there would be no trading, in person or electronically, on Monday. Wall Street is expected to remain closed on Tuesday, while many companies that were due to report their corporate earnings will likely delay their publication.
"The economic impact cannot be underestimated," said Elsa Lignos, an analyst at RBC Capital Markets.
Insurers such as Munich Re, Hannover Re and Zurich Insurance underperformed other stocks as investors worried about the potential cost of the storm’s damage.
They weighed on indexes across Europe. The FTSE 100 index of leading British shares dropped 0.2 percent to close at 5,795.10 while Germany’s DAX fell 0.4 percent to 7,203.16. The CAC-40 in France ended 0.8 percent lower at 3,408.89.
The uncertainty generated by the "superstorm" comes at the start of a big week in the United States. This is the last full week before next Tuesday’s presidential election and culminates Friday with the release of monthly jobs data, which many analysts think could have an impact on the vote.
"A significant swing in either direction is likely to be heavily reported in the media, potentially swinging the undecided voter," said James Hughes, chief market analyst at Alpari, of the jobs figures.
Despite the storm clouds over the U.S., the dollar has remained firm, partly because it often garners support at times of investor unease. The euro was 0.4 percent lower at $1.2892, for example.
Earlier, Asian markets shed early gains and closed mostly lower. Japan’s Nikkei 225 index fell marginally to 8,929.34 a day before the Bank of Japan’s monetary policy committee was to meet, to grapple yet again with the country’s longstanding economic doldrums. South Korea’s Kospi ended barely changed at 1,891.52 while Hong Kong’s Hang Seng fell 0.2 percent to 21,511.05.
Oil prices were on the retreat alongside equities, with the benchmark oil contract for December delivery down $1.24 to $85.04 a barrel in electronic trading on the New York Mercantile Exchange.
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