Markets steadied after Trump agrees Kim talks
European stock markets steadied yesterday following an Asian rally, with traders reacting to a shock decision by Donald Trump and Kim Jong Un to hold talks.
Markets were tracking also the latest developments in US President Trump’s tariffs plans, while traders awaited key monthly US jobs data due yesterday.
The agreement by Trump and North Korean leader Kim to hold talks “boosted risk sentiment..., encouraging investors to buy into riskier assets such as shares, whilst selling out of traditional safe havens such as gold and the Japanese yen”, noted Fiona Cincotta, senior market analyst at traders City Index.
South Korea, whose main stocks index closed up 1.1 percent yesterday, said the two leaders would hold an unprecedented summit by the end of May, raising hopes they can broker an agreement on Pyongyang’s nuclear programme that has fuelled tensions on the peninsula. A senior South Korean security official said Kim had “expressed his eagerness to meet President Trump as soon as possible”, while the US leader tweeted that “great progress” had been made in persuading the North to end its nuclear programme.
The development came just months after a period of extreme tension and bellicose rhetoric between Washington and Pyongyang that sounded like the growing drumbeat of war as the North carried out a series of missile and nuclear tests.
“It’s a big deal -- there’s no question this is a positive move,” Ian Bremmer, president of Eurasia Group, a political-risk research and consulting firm in New York, told Bloomberg TV.
“But also there is the possibility that it could go badly, that Trump could be embarrassed that they make an agreement that Kim Jong Un could backslide on.”
Hopes that the two could reach some sort of agreement also led to a plunge in the yen, which is considered a go-to safe currency in times of volatility and uncertainty. The dollar jumped to its highest level in a week against the Japanese unit.