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Asian stocks hit as Trump drops Kim summit

May 25 2018 07:31

Hong Kong - Asian markets mostly fell on Friday as Donald Trump shocked the world by pulling out of next month's historic summit with Kim Jong Un, though analysts said the losses were tempered by hopes the talks can be rekindled.

Traders had already been nervous in recent days after the US president warned he could pull out of the June 12 meeting with the North Korean leader, while also voicing his displeasure at a deal to avert a trade war with China and threaten tariffs on car imports.

The news on Thursday took many by surprise - including North and South Korean officials - and fuelled concerns about the future of a rapprochement that has had many hoping for peace on the divided peninsula.

In a letter released by the White House, Trump told Kim he was cancelling the summit because of North Korea's "anger" and "hostility". The message came after a key aide to Kim hit out at comments from Vice President Mike Pence, saying they were "ignorant and stupid" and warning the talks could be cancelled.

However, Trump's letter added that the talks could still go ahead "at a later date".

For its part, Pyongyang said the decision "unexpected" and "regrettable" but added: "We again state to the US our willingness to sit face-to-face at any time in any form to resolve the problem".

"It looks like we are back to fire and fury as the modus operandi for the White House again after President Trump (threatened) a new 25% car import tariff and cancelled the summit with North Korea," said Greg McKenna, chief market strategist at AxiTrader.

"Not only was the summit cancelled but it was back to threatening the DPRK with a military response."

Fears for oil cap

Wall Street ended lower, while Asian trading was muted. Tokyo ended the morning slightly higher, while Hong Kong slipped 0.3% and Shanghai was barely moved. Sydney and Singapore each fell 0.1% while Seoul was 0.2% lower.

Manila and Kuala Lumpur also fell but Wellington, Taipei and Jakarta were in positive territory.

While warning the issue remained fragile, analysts said there was still hope the meeting will go ahead.

"As we've seen countless times before, the president tends to walk back some of his more boisterous rhetoric time and time again," said Stephen Innes, head of Asia-Pacific trading at OANDA.

"While the US and their allies have offered a way to prosperity for North Korea, it was never going to come without some significant concession on the nuclear non-proliferation front."

And Eli Lee, Bank of Singapore's head of investment strategy, added: "Given the US' surprising acceptance of the meeting only in March, the cancellation... may simply be due to the fact that both sides need simply more time for preparation and to find a middle ground in terms of their demands."

On oil markets, both main contracts extended on Thursday's more than 1% losses after Russia said an agreement with OPEC to cap production - which has provided support to prices in recent years - could be up for revision at a meeting next month .

The comments from Energy Minister Alexander Novak dented a rally in the commodity, which has hit three-and-a-half-year highs on the back of improving demand and supply worries from Venezuela and Iran.

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