Stocks drop as Trump cancels summit
new york — US stocks dropped on Thursday after President Donald Trump canceled a planned summit with North Korean leader Kim Jong Un, while a slide in oil prices and bank stocks also weighed as investors grappled with fresh US protectionist plans.
At 10:03am EDT the Dow Jones Industrial Average was down 129.77 points, or 0.52 per cent, at 24,757.04, the S&P 500 was down 13.55 points, or 0.50 per cent, at 2,719.74 and the Nasdaq Composite was down 31.17 points, or 0.42 per cent, at 7,394.79.
Nine of the 11 major S&P sectors were in the red, with the technology sector’s 0.5 per cent decline weighing the most.
The decline accelerated after the North Korea-US summit cancellation. Shares of European and Asian automakers skidded on the possibility of import tariffs, while US automakers gained.
London was showing a loss of 0.5 per cent, Paris slipped by 0.2 per cent and Frankfurt shed 0.7 per cent. The region’s bourses had already fallen heavily on Wednesday after Trump said he was not satisfied with talks aimed at averting a trade war with China.
Trading was “rather muted... as traders digest the overall impact of a host of geopolitical events, including revival of US-China trade tensions, aggressive North Korea rhetoric and President Trump taking a swipe at auto equipment makers,” said Accendo Markets analyst, Artjom Hatsaturjants.
In Frankfurt, shares in carmakers BMW, Daimler and Volkswagen were hardest hit, as were French rivals Peugeot and Renault in Paris.
In London, news that official retail sales unexpectedly rebounded in April, lifting the pound.
A stronger pound weighs on share prices of multinationals listed in London that derive much of their earnings in dollars. Most major Asian stock markets fell, with traders concerned about the China-US trade deal and Trump’s looming summit with North Korean leader Kim Jong Un.
Japan’s Nikkei was the biggest loser, shedding more than one per cent in the morning session as the haven yen surged against the dollar.
Investors went into selling mode despite minutes from the Federal Reserve’s latest policy meeting that showed the central bank was less hawkish on interest rates than previously thought. The selling was in stark contrast to the start of the week when equities rallied on news that top officials from China and the US had agreed to pull back from imposing levies.
The news averted a potentially damaging trade war — for now.
However, Trump has since voiced his displeasure at that agreement and also raised the possibility that a historic summit Kim on June 12 could be delayed or called off.
A key aide to Kim on Thursday hit out at comments from Vice President Mike Pence and warned the talks could be cancelled.
Adding to the downward pressure on the greenback were the Fed minutes, which showed it may be willing to let inflation run slightly higher and above its two per cent target, as long as the spikes were temporary. The comments soothed worries about a sharp hike in borrowing costs, which have been needling markets for several months.