Trump/Kim summit fails to impress Wall St
Markets were steady after US President Donald Trump and North Korean leader Kim Jong Un on Tuesday signed a joint agreement after meeting in person for only a few hours, in which Mr Kim promised to work toward denuclearisation.
But the text of the agreement contained few concrete steps to achieve that goal other than a commitment “to hold follow-on negotiations ... at the earliest possible date,” according to a photo of the document.
For the US part, Mr Trump agreed to stop running military exercises in neighbouring South Korea as part of its agreement with North Korea, which in turn pledged to destroy a major missile engine testing site.
“We will be stopping the war games, which will save us a tremendous amount of money,” Mr Trump said during a post-summit news conference complaining that Seoul doesn't foot enough of the bill. And he mentioned that the exercises require US bombers to fly six and a half hours from Guam, where they are stationed. He even adopted North Korea’s language for the exercises, calling them “very provocative.”
Mr Kim made no promise to address the issue of Japanese citizens abducted by North Korea, and he offered no limits on his ballistic missile programmes.
Mr Trump also expressed a desire to eventually remove the thousands of American stationed on the Korean peninsula, another point of contention for North Korea.
"I want to get our soldiers out," he said but noted “that's not part of the equation right now.”
Both sides committed to an open-ended negotiating process. Given North Korea has halted missile and nuclear tests, this amounted to the dialogue and “suspension-for-suspension” model that China has advocated for years.
The summit's amicable atmosphere assuaged Beijing's immediate fears about hostilities on its doorstep. For Beijing, the prospect for better ties between Washington and Pyongyang is a positive outcome.
Investors now turn to Fed
Wall Street stocks brushed off the historic US-North Korea summit, which failed to impress investors, and switched their attention to the Federal Reserve’s policy decision tomorrow.
With borrowing costs returning to more normal levels, investors are looking for hints whether the Fed would move to raise rates three or four times this year.
Data on Tuesday shows US consumer prices rose marginally in May as gasoline price increases slowed and the underlying trend continued to suggest moderate inflation in the economy.
The Dow Jones Industrial Average barely changed at 1.58 points, or 0.0062%, to 25,320.73, the S&P 500 gained 4.85 points, or 0.17%, to 2,786.85 and the Nasdaq Composite added 43.87 points, or 0.57%, to 7,703.79.
The S&P 500 posted 41 new 52-week highs and two new lows; the Nasdaq Composite recorded 139 new highs and 22 new lows.
Twitter gained 4.6% after JP Morgan raised its price target on the stock by $US11 to $US50, saying it was confident about the company’s advertising revenue growth.
“The main issues are the Federal Reserve, the European Central Bank and the Bank of Japan, not really the tweets regarding trade issues – and that’s what we’re all waiting for. Maybe it’s a calm before the storm. Volume will definitely pick up starting tomorrow. You’ve got three press conferences in three days,” California-based Titus Wealth Management wealth adviser Derek Green says.
West Texas Intermediate crude climbed 0.2% to $66.27 a barrel. Gold fell 0.4% to $1,295.49 an ounce, the largest fall in over a week. LME copper fell 0.5% to $7,222 a metric ton.
Brexit rout avoided
In the UK, the House of Commons voted to reject an amendment passed in the House of Lords that would enable Parliament to take charge of the Brexit negotiating strategy if the government's deal is voted down or no agreement is reached.
By winning the vote, British Prime Minister Theresa May avoided a crisis that could have threatened her government. The government had to make concessions to rebel lawmakers of the governing Conservative party, which are believed to have included a new parliamentary motion if the government's Brexit deal is voted down.
“At the start of this process, we had no vote in Parliament on the final deal at all. Now we have a real vote and an opportunity for Parliament to influence and approve the final deal. But there is more work to do,” Nicky Morgan, a high-profile lawmaker who wants to maintain close EU ties, told Bloomberg.
In May, the House of Lords introduced 15 amendments to the bill, some of which are aimed at achieving a "soft" Brexit that would allow the UK to maintain close economic ties with the EU. The UK and the EE are negotiating the terms of Britain's exit from the bloc, which is set to take place March 2019.
Put it all behind us
White House trade adviser Peter Navarro might think there is a "special place in hell" for Canadian Prime Minister Justin Trudeau but the Trump administration hopes to move past the fireworks.
On Friday Agriculture Secretary Sonny Perdue will travel to Canada, where he will meet his counterpart, Lawrence MacAulay, and sit for a meeting designed to display the strength of co-operation between the two countries on agriculture. The warm overtures between the two agriculture leaders stand in stark contrast to the rhetoric from the White House over the weekend.
US Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland discussed the NAFTA renegotiation in a phone call that Ms Freeland’s office characterised as "productive and cordial." She will travel to Washington today to meet members of the Senate foreign relations committee at the request of chairman Bob Corker.
Both agencies are moving forward after President Donald Trump and his top advisers unleashed criticism of Canada's prime minister, Justin Trudeau, and his country's trade policies.
"It will be important to see what happens with dialogue between the US and its closest allies and trading partners when the president returns from Singapore. There is too much at stake in the economy to get this wrong or to allow a war of words to get in the way of our mutual prosperity," Canadian American Business Council chief executive Scotty Greenwood says.
All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.