Stock markets pressured by Kim-Trump summit failure

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A toy bull figurine sits on a trader’s monitor inside the Frankfurt Stock Exchange. The DAX 30 closed 0.3% up at 11,515.64 points yesterday.

World stock markets came under pressure yesterday as a summit between Donald Trump and Kim Jong-un ended abruptly without an agreement.Asian equities had been fluctuating throughout the day on tempered optimism over China-US trade talks, weak factory data from Beijing and fresh geopolitical tensions in Kashmir. But they took a decisive turn south after an expected lunch and signing ceremony between the US and North Korean leaders was called off at the last minute. Wall Street was modestly lower by the late New York morning, as unexpectedly strong fourth-quarter US growth figures helped offset negative sentiment over geopolitics and some soft earnings reports. In Europe, Frankfurt and Paris managed a small recovery by the close, while London remained in the red.

London’s FTSE 100 closed 0.2% down at 7,089.84 points, Frankfurt’s DAX 30 closed 0.3% up at 11,515.64 points and Paris’ CAC 40 closed 0.3% up at 5,240.53 points, while the EURO STOXX 50 closed 0.5% up at 3,298.26 points.“Global equities in general have pulled back as risk sentiment took a hit after the US and North Korea failed to reach an agreement over denuclearisation for the (Korean) peninsula,” said XTB analyst David Cheetham. “US president Donald Trump and North Korean leader Kim Jong-un abruptly cut short their summit in Hanoi, and in doing so cancelled a signing ceremony as the two leaders failed to make any tangible progress and agree terms on the deal.” The shock news came just hours after Kim raised the prospect of a permanent US diplomatic presence in Pyongyang and Trump said he was in “no rush” for a speedy deal over North Korea’s nuclear programme.

Trump later told reporters that he was not willing to give in to Kim’s demands to lift US sanctions on North Korea. In reaction, Seoul dived 1.8% and Tokyo ended 0.8% lower, while Shanghai and Hong Kong each shed 0.4%. The global rally that has characterised most of this year had already taken a knock after US Trade Representative Robert Lighthizer told lawmakers that “real progress” had been made in trade talks with China, but a lot of work was still needed before a pact is signed. In a sign that the ongoing trade spat is hurting protagonists, gloomy data showed Chinese manufacturing activity contracted for a third straight month in February, with factories hit by the long Lunar New Year break, concerns about slowing growth and uncertainty from the trade row. However, Zhou Hao, a senior emerging markets economist at Commerzbank AG, said the results were likely not as bad as they seemed and the outlook could be positive.

Sources and photo-credits: Gulf Times, AFP