Stocks mostly rise despite G7 woes, before Trump-Kim summit

The G7 summit ended in chaos at the weekend after Donald Trump withdrew his endorsement of a communique, accusing Canadian Prime Minister Justin Trudeau of dishonesty
AFP

London (AFP) – Global equity markets mostly rose Monday as traders brushed off a chaotic G7 meeting, and looked ahead to US President Donald Trump’s 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 grew despite a contentious Group of Seven (G7) summit of leading economic powers in Canada which failed to extinguish concerns of a global trade war, dealers said.

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.

The shock decision followed a testy gathering in Quebec, where the US president came under fire for his “America First” protectionist drive.

Trump lashed out at US allies Monday in a spectacular Twitter rant focusing on “massive trade surpluses” that he said the United States has faced “for decades” with its closest allies.

“Markets may be too complacent — but on the G7 split, investors think that a full-scale trade war will not take place. In my view, it is clearly a risk,” VTB Capital analyst Neil MacKinnon told AFP.

“Investors might also think the G7 split is just another example of Trump’s brinkmanship,” he noted, adding a Fed rate hike was “well priced in”.

 – Italy rules out euro exit – 

European equities won support after new Italian finance minister Giovanni Tria emphatically ruled out the nation’s exit from the single currency, with the Milan stock market surging two 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.

William Hamlyn, investment analyst at Manulife Asset Management, agreed.

“Markets are in a ‘risk on’ mode in Europe,” Hamlyn told AFP.

“From a European markets perspective there is more attention on the Italian finance minister’s commentary over the weekend, than on Trump’s talks or the G7.”

But sterling sank on grim UK official data that showed shrinking construction and manufacturing activity and sliding exports, as Britain’s European Union exit looms next year.

Cryptocurrencies plunged after a hack on a South Korean exchange sparked fresh concerns about the safety of the digital units. 

Bitcoin tumbled by 13 percent to $6,635 compared with Friday evening’s level, hitting the lowest level since April.

Oil prices meanwhile slid looking ahead to a key OPEC output meeting later this month.

– North Korea summit looms –

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

The leaders of North Korea and the United States are due to meet for the first time in history, with Pyongyang’s nuclear programme top of the agenda.

“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.

This week is also expected to see the Federal Reserve lift interest rates again, and traders will be poring over its post-meeting statement for an idea about future moves.

That will be followed by the European Central Bank’s gathering, which could see policymakers discuss winding down its crisis-era stimulus programme.

– Key figures around 1045 GMT –

London – FTSE 100: UP 0.9 percent at 7,750.47 points 

Paris – CAC 40: UP 0.2 percent at 5,463.46

Frankfurt – DAX 30: UP 0.5 percent at 12,830.46

Milan – FTSE MIB: UP 2.2 percent at 21,883.80

Madrid: IBEX 35: UP 0.9 percent at 9,829.40

EURO STOXX 50: UP 0.5 percent at 3,465.23

Tokyo – Nikkei 225: UP 0.5 percent at 22,804.04 (close)

Hong Kong – Hang Seng: UP 0.3 percent at 31,063.70 (close)

Shanghai – Composite: DOWN 0.5 percent at 3,052.78 (close)

New York – Dow Jones: UP 0.3 percent at 25,316.53 (close)

Euro/dollar: UP at $1.1783 from $1.1775 at 2100 GMT

Pound/dollar: DOWN at $1.3354 from $1.3416

Dollar/yen: UP at 110.03 yen from 109.32 yen

Oil – Brent Crude: DOWN 80 cents at $75.66 per barrel

Oil – West Texas Intermediate: DOWN 69 cents at $65.05

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