Dollar rises, stocks inch up as U.S.-North Korea summit gets underway
12 June, 2018, 2:06 pm
SYDNEY – The dollar jumped to a 3-week top on Tuesday while Asian stocks edged up as a highly anticipated US-Korea summit got underway in Singapore, potentially paving the way to ending a nuclear stand-off on the Korean peninsula.
US President Donald Trump and North Korean leader Kim Jong Un shook hands and smiled as they started the historic summit, just months after they traded insults and tensions spiraled in the region over North Korea’s nuclear and missile programs
Trump told Kim “we will have a terrific relationship” amid handshakes, but there was some unease among investors about the outcome of the talks given the tense relations between the two nations.
The combatants of the 1950-53 Korean War are technically still at war, as the conflict, in which millions of people died, was concluded only with a truce.
Trading was volatile as MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS seesawed between positive and negative territory. It was last up 0.1 percent, while Japan’s Nikkei .N225 pared early gains to be up 0.6 percent.
Ahead of the summit, Trump had said the meeting could “work out very nicely” as the countries try to narrow differences on how to end a nuclear standoff on the Korean peninsula.
Many analysts said the bar was pretty low for what will be deemed a successful summit, given the past failures in talks with North Korea.
“So today, we have the opportunity for a historic meeting, a possible end to the Korean war, and a possible move to denuclearize, and maybe even demilitarize the Korean peninsula,” said Robert Carnell, chief economist Asia-Pacific at ING.
“All of that’s great, but how can you make money from it. Well, the short answer is you probably shouldn’t even try,” he added.
Carnell said the impact from an end to the nuclear stand-off and a possible end of sanctions on North Korea is likely to be “marginal” on future trade and corporate earnings.
Instead a far bigger “existential global threat” was the ongoing tariff dispute after Trump upset the Group of Seven’s efforts to show a united front, choosing to back out of a previous joint communique.
The action drew criticism from Germany and France, and Trump called Canadian Prime Minister Justin Trudeau “very dishonest and weak.”