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Stock markets rise before Trump-Kim summit

Jun 12 2018 09:19

Global equity markets rose on Monday as traders brushed off a chaotic Group of Seven meeting to focus instead on US President Donald Trump's upcoming summit with North Korean leader Kim Jong Un.

Investors were also on tenterhooks ahead of this week's European Central Bank and Federal Reserve interest rate decisions.

Stock prices mostly rose despite a contentious G7 summit of leading economic powers in Canada which failed to end concerns of a global trade war, dealers said.

"The weekend G7 meeting in Canada didn't disappoint those expecting a dysfunctional atmosphere," said analysts at Charles Schwab.

Trump pulled out of endorsing a joint communique after the G7 meet finished on Saturday, accusing Canadian Prime Minister and summit chairman Justin Trudeau of dishonesty.

Analysts varied in their assessment of the implications of the breakdown.

"It is probably more bluster than anything else," said Bill Lynch, director of investment at Hinsdale Associates. "It will probably blow over and end up not having much effect on our economy going forward."

Euro promise lifts Milan

European equities won support after new Italian Finance Minister Giovanni Tria emphatically ruled out an Italian exit from the single currency, with the Milan stock market up ell over three percent.

"European markets are rallying mainly because investors are less concerned about Italy as the Italian finance minister has assured that the country is committed to bring its debt lower," said Naeem Aslam, analyst at trading firm Think Markets.

But Capital Economics analyst Ingvild Borgen Gjerde warned that markets might be failing to take political risk seriously enough, partly because of encouraging signs on the state of the US economy.

"We think that the markets are complacent about the political outlook and don't expect the good news on the US economy to last either," she said.

Rate decisions coming up

In Asia, the focus was squarely on Tuesday's historic nuclear summit between Donald Trump and Kim Jong Un in Singapore.

"Barring any surprises the talks should mark a positive step in terms of easing geopolitical tensions in the region," said ADS Securities analyst Konstantinos Anthis.

But Lynch of Hinsdale Associates said expectations for the talks were "fairly low" and that any agreement would be a "long, drawn-out process."

This week is also expected to see the Federal Reserve lift interest rates again and traders will be poring over the Fed's public remarks and statements by chairperson Jerome Powell for clues about future moves.

That will be followed by the ECB's gathering, which could see policymakers discuss winding down its crisis-era stimulus program.

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equities  |  markets  |  global markets
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