Global stocks, dollar retreat after U.S.-North Korea summit

Reuters News:   

World stocks slipped on Tuesday and the dollar retreated from a three-week high after a U.S.-North Korea summit aimed at the denuclearization of the Korean peninsula.

U.S. President Donald Trump and North Korean leader Kim Jong Un pledged to work toward complete denuclearization of the Korean peninsula, while Washington committed to providing security guarantees for its old enemy.

The MSCI All-Country World index .MIWD00000PUS, which tracks shares in 47 countries, fell nearly 0.1 percent on the day. The dollar .DXY slipped into negative territory in morning trade in Europe after earlier reaching a three-week high. It was last flat on the day.

Investors had mixed reactions to the summit, which ended with the signing of a joint statement that gave few details on how the goals set by both sides would be achieved.

“Any de-escalation is good, because in the background you always have worries about these situations,” said Old Mutual Global Investors European fund manager Ian Ormiston, adding trade conversations over the weekend at the G7 summit were more concerning.

Others, such as RBC Capital Markets’ head of Asia FX strategy Sue Trinh said there was “nothing particularly game-changing” about the summit and both sides stood far apart on what denuclearization means.

“To the U.S., it means North Korea must deliver complete, verifiable and irreversible denuclearization. To Kim, it means North Korea suspends nuclear and missile tests in exchange for major economic concessions and the U.S. stepping back as torchbearer for the Asian region.”

In Asian equity markets, trading was volatile with Japan’s Nikkei .N225 paring early gains to close 0.3 percent higher after earlier rising as much as 0.9 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS seesawed between positive and negative, and was last up 0.15 percent. South Korean shares .KS11 were weaker while Chinese shares were buoyant after starting in the red. The blue-chip CSI 300 index .CSI300 jumped about 1.3 percent.

Europe had a muted open, with the pan-European STOXX 600 index last up less than 0.1 percent [.EU]. Futures indicated a lower open on Wall Street. ESc1 NQC1 [.N]

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