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Asian, European stocks up after historic N.Korea summit
HONG KONG, June 12, 2018 (BSS/AFP) – Major markets in Asia and Europe rose
Tuesday after Donald Trump and Kim Jong Un held a historic summit, while
investors look ahead to key policy meetings at the Federal Reserve and
European Central Bank this week.
Trump said he had formed a “special bond” with the North Korean leader,
who reaffirmed his commitment to “complete denuclearisation of Korean
Peninsula” in a joint agreement signed by the two.
While the meeting was not expected to see any immediate results, it has
provided hope for peace on the Korean peninsula.
However, investors remain concerned about a possible global trade war
after the weekend’s Group of Seven summit in Canada ended with Trump
withdrawing support for a joint communique and accusing host Prime Minister
Justin Trudeau of being dishonest.
That came just after he had hit Canada, Mexico and the European Union with
steel and aluminium tariffs, sparking threats of retaliation that some fear
could escalate.
For most of the day eyes were on Singapore, where Trump and Kim became the
first sitting leaders of their countries to meet.
The pair signed what Trump called a “pretty comprehensive” and “very
important” document, which spoke of “new US-DPRK relations” and committed
Washington to “security guarantees”.
Kim said the two Cold War foes had vowed to “leave the past behind” and
promised “the world will see a major change”.
– ‘Air of optimism’ –
Stocks fluctuated through the day but by the end of trade Tokyo was up 0.3
percent and Shanghai closed 0.9 percent higher. Hong Kong was 0.1 percent
higher.
However, Seoul dipped 0.1 percent, while the Korean won eased 0.2 percent.
Singapore was slightly lower, as were Wellington, Kuala Lumpur and Taipei.
MORE/MR/ 1430 hrs
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In early trade London and Paris each rose 0.3 percent, while Frankfurt
gained 0.8 percent.
“After quickly shrugging off the G7 fight club in Quebec, investors
latched on to the air of optimism circulating from the Singapore summit,”
said Stephen Innes, head of Asia-Pacific trading at OANDA.
“And with pro-euro signals emanating from the newly formed Italian
government placating investors anxiety about the future of the eurozone, the
global risk was in the happy zone Monday.”
However, Goohoon Kwon, co-head of Korea research and senior Asia economist
at Goldman Sachs, told Bloomberg Television ahead of the signing that markets
had already factored in a lower risk of conflict on the Korean peninsula.
He added that the “follow through, execution, implementation” of any
agreements was most crucial.
While the Trump-Kim summit was the big news story, traders are keenly
awaiting the Fed and ECB policy meetings. The US bank is expected to lift
interest rates Wednesday but its post-meeting statement will be closely
watched for a clue about its plans for future hikes.
Then on Thursday, European bank officials will likely debate for the first
time cutting back on their crisis-era stimulus programme.
The euro extended gains after rallying Monday on the back of comments from
new Italian Finance Minister Giovanni Tria ruling out Rome’s exit from the
single currency. That eased concerns about his populist, Eurosceptic
government’s intentions regarding the currency bloc.
The pound was also under pressure as British MPs prepare to vote on a
string of amendments to key Brexit legislation that could force Prime
Minister Theresa May’s hand in talks with the European Union.
– Key figures around 0810 GMT –
Tokyo – Nikkei 225: UP 0.3 percent at 22,878.35 (close)
Hong Kong – Hang Seng: UP 0.1 percent at 31,103.06 (close)
Shanghai – Composite: UP 0.9 percent at 3,079.80 (close)
London – FTSE 100: UP 0.3 percent at 7,760.24
Euro/dollar: UP at $1.1800 from $1.1785 at 2100 GMT
Pound/dollar: DOWN at $1.3370 from $1.3378
Dollar/yen: UP at 110.31 yen from 110.02 yen
Oil – West Texas Intermediate: UP 37 cents at $66.47 per barrel
Oil – Brent Crude: UP 31 cents at $76.77 per barrel
New York – Dow Jones: FLAT at 25,322.31 (close).
BSS/AFP/MR/ 1430 hrs