Asian markets fluctuate as Trump meets Kim, eyes on central banks

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HONG KONG, June 12, 2018 (BSS/AFP) – Asian investors were cautious on
Tuesday as they keep watch on the historic summit between Donald Trump and
North Korean leader Kim Jong Un, and await key policy meetings at the Federal
Reserve and European Central Bank this week.

While the meeting is not expected to see any immediate results, it has
provided hope for peace on the Korean peninsula.

But there remain some concerns about a possible global trade war after the
weekend’s Group of Seven summit in Canada ended with Trump withdrawing
support for a joint communique and accusing host Prime Minister Justin
Trudeau of being dishonest. That come just after he had hit Canada, Mexico
and the European Union with steel and aluminium tariffs, sparking threats of
retaliation that some fear could escalate.

But for now eyes are on Singapore, where Trump and Kim became the first
sitting leaders of their countries to meet.

The pair shared a historic handshake ahead of unprecedented talks to tackle
a tense decades-old nuclear stand-off and an enmity stretching back to the
Cold War.

“The way to come to here was not easy,” Kim said, sitting at a table with
Trump. “The old prejudices and practices worked as obstacles on our way
forward but we overcame all of them and we are here today.”

– ‘Air of optimism’ –

Stocks fluctuated through the morning and by the break Tokyo was up 0.3
percent, while Sydney rose 0.2 percent.

Hong Kong pared early gains to sit flat, while Shanghai slipped 0.2
percent. Singapore dipped 0.1 percent and Seoul was marginally lower.

“After quickly shrugging off the G7 fight club in Quebec, investors latched
on to the air of optimism circulating from the Singapore summit,” said
Stephen Innes, head of Asia-Pacific trading at OANDA.

“And with pro-euro signals emanating from the newly formed Italian
government placating investors anxiety about the future of the eurozone, the
global risk was in the happy zone Monday.”

While the Trump-Kim summit is the big news story, traders are keenly
awaiting the Fed and ECB policy meetings.

The US bank is expected to lift interest rates Wednesday but its post-meeting
statement will be closely watched for a clue about its plans for future
hikes.

Then on Thursday, European bank officials will likely debate for the first
time cutting back on their crisis-era stimulus programme.

The euro rallied Monday on the back of comments from new Italian Finance
Minister Giovanni Tria ruling out an Italian exit from the single currency.
That eased concerns about his populist, Eurosceptic government’s intentions
regarding the currency bloc.

However, the single currency dropped slightly in Asia, while the pound was
also under pressure as British MPs prepare to vote on a string of amendments
to key Brexit legislation that could force Prime Minister Theresa May’s hand
in talks with the European Union.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.3 percent at 22,867.41 (break)

Hong Kong – Hang Seng: FLAT at 31,062.45

Shanghai – Composite: DOWN 0.2 percent at 3,046.77

Euro/dollar: DOWN at $1.1760 from $1.1785 at 2100 GMT

Pound/dollar: DOWN at $1.3356 from $1.3378

Dollar/yen: UP at 110.32 yen from 110.02 yen

Oil – West Texas Intermediate: DOWN three cents at $66.07 per barrel

Oil – Brent Crude: DOWN six cents at $76.40 per barrel

New York – Dow Jones: FLAT at 25,322.31 (close)

London – FTSE 100: UP 0.7 percent at 7,737.43 (close).