Investors in wait-and-see mode after Trump-Kim summit
World stock markets were mixed Tuesday as investors digested the outcome of a summit between U.S. President Donald Trump and North Korean leader Kim Jong Un.
The U.S. markets were indicated to drift slightly lower, with Dow futures down 0.2 percent and S&P 500 futures 0.1 percent lower. France’s CAC 40 was down 0.2 percent to 5,461, while Germany’s DAX was flat at 12,838. Britain’s FTSE 100 lost 0.3 percent 7,712.
The meeting between the two leaders, approximately 50 minutes long, resulted in the two men signing what Mr. Trump called a “pretty comprehensive” joint document in which they committed to working “toward complete denuclearization of the Korean Peninsula.” They also pledged “to build a lasting and stable peace regime” in the region.
Yet investors are in a wait-and-see mode as “the work of thrashing out the details seemingly remains to be done,” according to Freya Beamish, chief Asia economist at Pantheon Macroeconomics.
“The document is short, and appears to contain commitments rather than implementation details,” Beamish wrote. “Even if opening North Korea is [Kim Jong Un’s] intention, there remain many diplomatic hurdles, and markets so far have been little moved.”
Beamish added, “In the longer-term, however, we think Sino-U.S. negotiations will face an uphill struggle as the realities of the economic relationship between China and the U.S. likely will be little changed over the next 18 months. That will complicate any undertakings between the U.S. and North Korea.”
Shares in Asia were also mixed. Japan’s benchmark Nikkei 225 rose 0.3 percent to finish at 22,878.35. Australia’s S&P/ASX 200 was up 0.2 percent at 6,054.40. South Korea’s Kospi fell less than 0.1 percent to 2,468.83 after fluctuating earlier. Hong Kong’s Hang Seng’s rose 0.1 percent to 31,103.06, while the Shanghai Composite index added 0.9 percent to 3,079.80.
The Federal Reserve will start a two-day meeting on interest rates on Tuesday, wrapping up on Wednesday. Investors expect the central bank to raise interest rates from their current level of 1.75 percent to 2 percent, but most attention will be on how many rate hikes Fed officials are considering doing later this year. On Thursday, the European Central Bank will meet and could outline an end to its stimulus program, while on Friday the Bank of Japan is due to give its latest policy update.
ENERGY AND CURRENCIES
Benchmark U.S. crude rose 19 cents to $66.29 a barrel. It was up 36 cents to $66.10 per barrel Monday in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, added 25 cents to $76.71 per barrel in London.
The dollar rose to 110.22 yen from 109.48 yen late Monday in Asia. The euro edged down to $1.1786 from $1.1799.
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