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Markets mostly drop on Kim-Trump summit failure

  • News Desk

    Agence France-Presse

London   /   Thu, February 28, 2019   /   08:38 pm
Markets mostly drop on Kim-Trump summit failure An image of the London Stock Exchange FTSE 100 chart is pictured at the close of trading, in Kent on December 29, 2017. London's FTSE 100 ended 2017 on a new record high on December 29, 2017, on a shortened final day of trading before the New Year break. BEN STANSALL (AFP/Ben Stansall)

World stock markets mostly sank Thursday as a summit between Donald Trump and Kim Jong Un ended abruptly without an agreement.

Asian equities had been fluctuating throughout the day on tempered optimism over China-US trade talks, weak factory data from Beijing and fresh geopolitical tensions in Kashmir.

But they took a decisive turn south after an expected lunch and signing ceremony between the US and North Korean leaders was called off at the last minute.

European indices also mainly fell, with London down half a percentage point on persistent Brexit uncertainty, and the pound continued to struggle.

"Global equities in general have pulled back as risk sentiment took a hit after the US and North Korea failed to reach an agreement over denuclearisation for the (Korean) peninsula," said XTB analyst David Cheetham.

"US president Donald Trump and North Korean leader Kim Jong Un abruptly cut short their summit in Hanoi, and in doing so cancelled a signing ceremony as the two leaders failed to make any tangible progress and agree terms on the deal."

The shock news came just hours after Kim raised the prospect of a permanent US diplomatic presence in Pyongyang and Trump said he was in "no rush" for a speedy deal over North Korea's nuclear programme.

Trump later told reporters that he was not willing to give in to Kim's demands to lift sanctions on the country.

"It was about the sanctions," he said. "Basically, they wanted the sanctions lifted in their entirety, and we couldn't do that."

However, he said the talks ended on friendly terms and he was hopeful of progress further down the line.

In reaction, Seoul dived 1.8 percent and Tokyo ended 0.8 percent lower, while Shanghai and Hong Kong each shed 0.4 percent.

The global rally that has characterised most of this year had already taken a knock after US Trade Representative Robert Lighthizer told lawmakers that "real progress" had been made in trade talks with China, but a lot of work was still needed before a pact is signed.

While his comments did not derail expectations of an agreement at some point -- with both sides reporting good progress and Trump delaying a deadline for a deal -- it did give traders pause for thought, observers said.

 

 Chinese economic gloom 

 

Also fuelling selling pressure was gloomy data showing Chinese manufacturing activity contracted for a third straight month in February, with factories hit by the long Lunar New Year break, concerns about slowing growth and uncertainty from the trade row.

However, Zhou Hao, a senior emerging markets economist at Commerzbank AG, said the results were likely not as bad as they seemed and the outlook could be positive.

"I think we still want to wait for the next month's reading as this month's is distorted by the holiday," he said.

"Also the economy could stabilise this month. Rising input prices suggest that there is no need to worry about deflation, so the question now rests on whether the economy has enough impetus."

Nervousness continues to stalk trading floors after Pakistan and India said they had shot down each other's fighter jets on Wednesday, fuelling worries of a conflict between the nuclear-armed neighbours.

 

 Key figures around 1200 GMT 

 

London - FTSE 100: DOWN 0.6 percent at 7,067.76 points

Frankfurt - DAX 30: DOWN 0.1 percent at 11,476.52

Paris - CAC 40: FLAT at 5,225.72

EURO STOXX 50: UP 0.1 percent at 3,287.50

Tokyo - Nikkei 225: DOWN 0.8 percent at 21,385.16 (close)

Hong Kong - Hang Seng: DOWN 0.4 percent at 28,633.18 (close)

Shanghai - Composite: DOWN 0.4 percent at 2,940.95 (close)

New York - Dow: DOWN 0.3 percent at 25,985.16 (close)

Pound/dollar: DOWN at $1.3304 from $1.3309

Euro/pound: UP at 85.80 pence from 85.43 pence

Euro/dollar: UP at $1.1416 from $1.1370 at 2200 GMT

Dollar/yen: DOWN at 110.76 yen from 111.00 yen

Oil - Brent Crude: DOWN 35 cents at $66.04 per barrel

Oil - West Texas Intermediate: DOWN 30 cents at $56.64