Markets slide as North Korea summit with US called off

LONDON

MARKETS were knocked yesterday as traders were caught off-guard by the US decision to cancel its summit with North Korea.

Donald Trump has said he will not meet North Korean leader Kim Jong Un, saying rising tensions had ruined “a great opportunity for lasting peace”.

The geopolitical upheaval sent US and European stocks downwards, with the FTSE-100 closing the day 0.92% or 71.7 points lower at 7716.74.

The Cac 40 in France and the Dax in Germany were down by 0.31% and 0.94% respectively, while the Dow Jones Industrial Average dropped 0.60%.

Ken Odeluga, market analyst at City Index, said: “With that buffer apparently now removed, we should expect the market to demonstrate a less sanguine attitude to wider geopolitical currents, for instance over faltering discussions in North America and between China.

“US shares will be the most obvious conduit for weakening sentiment, though in the short term, it is also likely to be reflected via the dollar.”

In currency markets, sterling was supported by solid UK retail sales, which grew by 1.6% month-on-month.

The pound was up 0.22% against the dollar at 1.338. Against the euro, the pound was flat at 1.141 towards the end of the session.

Oil prices fell back following speculation that the Organisation of Petroleum Exporting Countries would increase output. Brent crude prices fell by 0.75% to $79.050 a barrel.

In UK stocks, Lloyds Banking Group suffered double humiliation after more than one-fifth of investors voted against pay for top bosses, while TV star Noel Edmonds publicly berated the board.

At its annual meeting, there was more than 20% opposition in terms of votes on the directors’ remuneration report, which included a £6.42 million pay packet for boss Antonio Horta-osorio. Shares closed the session 0.63p lower at 66p.

Tate & Lyle’s shares were lifted when its new boss Nick Hampton outlined plans for $100m (£75m) of cost savings and a boost to profits as part of an overhaul after taking up the reins last month. Shares rose 7.32% or 44.6p to 653.6p.

BT’S shares took a hit after it emerged boss Gavin Patterson is celebrating a £1m hike in annual pay, weeks after swinging the axe on 13,000 jobs. Mr Patterson took home a total of £2.3m last year after receiving a £1.3m annual bonus, according to the telecom giant’s annual report. Shares fell 3.15p during trading to 203.15p.

B&Q owner Kingfisher’s shares edged downwards, falling by 1.5p to 296.9p by the market close, after sales were pummelled by the Beast from the East in the first quarter.

The biggest risers on the FTSE-100 were Intertek Group up 176p to 5,350p, Paddy Power Betfair up 225p to 8,855p, Smith & Nephew up 21p to 1,347p and Diageo up 37.5p to 2,745.5p.

The biggest fallers were Mediclinic International down 64p to 615.6p, Morrisons down 9.2p to 245.2p, 3i Group down 28.6p to 985.4p and Microfocus International down 31.5p to 1,326.5p.

NEW YORK

US stocks ended down slightly yesterday after President Donald Trump cancelled a planned summit with North Korea’s Kim Jong-un and threatened to impose tariffs on car imports, though losses were limited by gains in Netflix and General Electric.

Trump’s order for an investigation into whether vehicle and car part imports had damaged the US car industry could further complicate trade negotiations with China and other trading partners.

Early yesterday, Trump cancelled the June 12 meeting citing Pyongyang’s “open hostility,” even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site. But stocks recouped much of the day’s losses by the end of the session, and market participants said the sharp drop after the summit was off was a knee-jerk reaction.

People were genuinely pleased that it was going to happen,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“And I still wouldn’t be surprised to see a reversal of this reversal sometime in the next few weeks as each side sits down and thinks about what’s really in its best interest.”

General Electric rose 3 per cent and Netflix’s gained 1.3%, both helping the market.

The Dow Jones fell 75.05 points to 24,811.76, the S&P 500 lost 5.53 points to 2,727.76 and the Nasdaq Composite 1.53 points to 7,424.43.