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Global Markets: Stocks on edge, dollar rises as Trump, Kim raise hopes at landmark summit

Reuters  |  SYDNEY 

By Swati Pandey

SYDNEY (Reuters) - The dollar jumped to a 3-week top on Tuesday while stock markets in ticked higher as a landmark U.S.-summit in Singapore raised hopes the bitter foes might be able to strike a deal to end a nuclear stand-off on the

U.S. said he had forged a "good relationship" with North Korean leader Un at the start of their historic meeting, just months after they traded insults and tensions spiralled in the region over the reclusive regime's nuclear programmes.

Kim said the meeting was "a good prelude to peace", 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.

The dollar rose against the safe-haven yen, while the Korean won gained 0.2 percent to edge above a recent two-week trough. U.S. stock futures were barely changed with E-Minis for the up 0.02 percent and Dow futures inching 0.06 percent higher.

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

MSCI's broadest index of shares outside seesawed between positive and negative territory, and was last up 0.1. South Korean shares fell 0.2 percent in choppy deals, while Chinese shares were buoyant after starting in the red with the blue-chip jumping 0.8 percent.

Australian shares were a tad firmer.

"It seems that investors are hesitant to carry large directional exposure into this week's events," analysts said in a note.

Even so, leveraged investors were long Korean won, said citing the average of past four weeks of money flows.

"Any disappointment from the summit could cause an unwind of such bullish positions. On the other hand, a successful summit could trigger a faster conversion into the Korean Won of foreign currency deposits."

Many analysts said the bar was pretty low for what will be deemed a 'successful' summit, given the past failures in talks with

"So today, we have the opportunity for a historic meeting, a possible end to the Korean war, and a possible move to denuclearise, and maybe even demilitarize the Korean peninsula," said Robert Carnell, 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."

Carnell said that 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 and France, and Trump called Canadian "very dishonest and weak."

JOLT

However, "markets are generally shrugging off the trainwreck," said Ray Attrill, at

Instead, they are looking ahead to a busy week.

Tuesday's summit will be followed by policy meetings of the U.S. Federal Reserve, which is expected to raise rates, and the as well as a Brexit bill vote in the

The dollar was well bid on Tuesday, with the dollar index up 0.2 percent against a basket of major currencies.

On the safe haven yen, the dollar jumped to a three-week top of 110.49 in early deals. It was last at 110.28.

Helping calm markets were comments from Italy's new coalition government that it had no intention of leaving the euro zone and planned to cut debt.

The euro stepped back from a three-week high of $1.1840 to be last down 0.2 percent at $1.1763.

In commodities, U.S. crude was rose 6 cents to $66.16 per barrel, while Brent dipped 1 cent to $76.45.

Spot gold slipped 0.2 percent to $1,297.42 an ounce.

(Editing by Shri Navaratnam)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, June 12 2018. 10:45 IST
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