TSX and NYSE stocks rally as North Korean fears wane

Stock markets were higher in Canada and the United States on Monday as tensions over armed confrontation with North Korea seemed to ease.

Last week was the worst for stocks since late March as rising tensions between the U.S. and North Korea startled investors out of the complacency seen in stock markets for most of this year.

That concern eased Monday after officials said fighting is not imminent. The top U.S. military officer said the country wants to resolve the standoff peacefully.

• War with North Korea is unlikely, but here's what the experts say to watch for

"Markets are stabilizing," said foreign exchange analyst Karl Schamotta with Cambridge Global Payments. "Safe-haven currencies like the Swiss franc and Japanese yen [are] losing altitude as key volatility gauges normalize."

Last Thursday was the worst day for stocks since mid-May, and Monday's rally was one built on relief.

"What the market really reacted negatively to on Thursday was Trump's somewhat incendiary comments about 'fire and fury,'" said Dave Lafferty, chief market strategist of Natixis Global Asset Management. "The administration sort of walked back Trump's comments over the weekend."

The S&P/TSX composite index gained 86 points to 15,119. Most sectors of the index, with the exception of energy and health-care stocks, were higher. Banks,which make up a large chunk of the index, were higher.

Oil was down $1.33 a barrel to $47.49US, which caused the loonie to lose about a third of a cent to change hands at 78.58 cents US.

"The resumption of NAFTA negotiations in Washington could trigger a sell-on-rumour/buy-on-news dynamic in the Canadian dollar," Schamotta said,"with traders reacting negatively when the opening salvos are launched by the Trump administration, only to reverse direction when tough bargaining positions are inevitably walked back."

• NAFTAdiscussions begin as Canada seeks to modernize standards

The Dow Jones Industrial Average finished just below the 22,000-point threshold with a 135-pointgain. And the broader S&P 500 fared best of all, up by more than oneper cent at 2,465.

Technology stocks in particular were higher, asApple added $2.16, or 1.4 per cent, to $159.64 and Microsoft picked up $1.09, or 1.5 per cent, to $73.59.

Fiat Chrysler stock gained 81 cents, or sevenper cent, to $12.42 after a report in the Automotive News said an unnamed Chinese company had made an offer for the company, which was rejected for not being high enough.