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Global markets boosted by breakthrough Korea summit

Apr 29 2018 11:27

London - Asian and European stock markets advanced on Friday with global investor sentiment boosted by a historic meeting of the leaders of North and South Korea.

However Wall Street wobbled as data showed that US economic growth slowed at the beginning of the year, although the annualised rate of 2.3% growth rate was better than many economists had feared.

"European equity markets are higher ... after a strong finish in Asia," noted CMC Markets analyst David Madden.

"The historic meeting of the leaders of North and South Korea has given a boost to the geopolitical mood - which was been tepid recently."

In Asia, Seoul's Kospi shares index was among the best performers and the won strengthened as the leaders of North and South Korea held talks.

Kim Jong Un and Moon Jae-in have agreed to pursue a permanent peace and the complete denuclearisation of the divided peninsula, as they embraced after a historic summit laden with symbolism.

Historic summit

In a day of bonhomie including a highly symbolic handshake over the Military Demarcation Line that divides the two countries, the pair issued a declaration on "the common goal of realising, through complete denuclearisation, a nuclear-free Korean peninsula".

Upon signing the document, the two leaders shared a warm embrace, the culmination of a summit filled with smiles and displays of friendship in front of the world's media.

They also agreed that they would this year seek a permanent end to the Korean War, 65 years after the hostilities ended in an armistice rather than a peace treaty.

It was the highest-level encounter yet in a whirlwind of nuclear diplomacy, and intended to pave the way for a much-anticipated encounter between Kim and US President Donald Trump.

"De-escalation in the geopolitics continues," noted ThinkMarkets analyst Naeem Aslam.

"North Korea has dramatically softened his stance towards his nuclear arms race and it is something purely because of the Trump tactics."

Pound plunges on slowdown

The pound meanwhile plunged Friday as news of Britain's sharp economic slowdown extinguished hopes of an interest rate hike next month.

Gross domestic product grew by just 0.1% in the first quarter or three months to March, from 0.4% in the preceding quarter, official data showed.

"Suddenly Britain's growth looks brittle and bruised," said David Lamb, head of dealing at FEXCO Corporate Payments.

"The Bank of England, which barely a month ago was hinting bullishly at a May interest rate rise, will now be very wary of doing anything that could jeopardise things further."

The news sent the pound tumbling to $1.3747, a level unseen since January. And the European single currency rose as high as 87.85 pence per euro.

"All this has hit sterling like a bucket of cold water," added Lamb.

Meanwhile, Europe's main stock markets advanced, helped also by positive US corporate results.

London's FTSE 100 index jumped 1.1% as the pound weakness lifted share prices of London-listed multinationals that derive the lion's share of their earnings in dollars.

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