TOKYO (AP) — Asian shares were mostly higher Tuesday but Europe opened mixed as market players tried to digest the summit between President Donald Trump and North Korean leader Kim Jong Un in Singapore.
KEEPING SCORE: France’s CAC 40 was little changed but inched down to 5,472.42 in early trading, while Germany’s DAX was up 0.1 percent to 12,861.27. Britain’s FTSE 100 lost 0.2 percent 7,720.96. U.S. shares were set to drift higher with Dow futures gaining 0.1 percent to 25,366. S&P 500 futures rose nearly 0.1 percent to 2,789.
ASIA’S DAY: Japan’s benchmark Nikkei 225 was up 0.3 percent to finish at 22,878.35. Australia’s S&P/ASX 200 was up 0.2 percent at 6,054.40. South Korea’s Kospi fell less than 0.1 percent to 2,468.83 after fluctuating earlier in the day. Hong Kong’s Hang Seng’s rose 0.1 percent to 31,103.06, while the Shanghai Composite index added 0.9 percent to 3,079.80.
SUMMIT WATCH: Trump and Kim concluded their summit by signing a joint document in which they committed to working “toward complete denuclearization of the Korean Peninsula” and to joining together “to build a lasting and stable peace regime” on the Korean Peninsula. The broad promises largely reiterated past agreements and included a commitment to “establish new U.S.-DPRK relations” but not an agreement to end the technical state of war.
CENTRAL BANKS: The Federal Reserve will start a two-day meeting on interest rates on Tuesday, wrapping up on Wednesday. Investors expect the nation’s central bank to raise interest rates from their current level of 1.75 percent to 2 percent, but most attention will be on how many rate hikes Fed officials are considering doing later this year. On Friday, the Bank of Japan is due to give its latest policy update.
ANALYST’S TAKE: “Deal or no deal? Just don’t ask what comprises a ‘deal’ and we are fine. At the risk of sounding a tad frivolous, that appears to be the truth of the matter,” said Vishnu Varathan of Mizuho Bank in Singapore of the Trump-Kim summit.
ENERGY: Benchmark U.S. crude rose 37 cents to $66.47 a barrel. It was up 36 cents to $66.10 per barrel Monday in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, added 45 cents to $76.91 per barrel in London.
CURRENCIES: The dollar rose to 110.30 yen from 109.48 yen late Monday in Asia. The euro edged up to $1.1804 from $1.1799.
Investing.com – Here are the top five things you need to know in financial markets on Tuesday, June 12:
1. Trump, Kim Sign ‘Comprehensive’ Document
U.S. President Donald Trump and North Korean leader Kim Jong Un pledged to work toward complete denuclearization of the Korean peninsula, while Washington committed to provide security guarantees for its old enemy.
At the end of their historic summit in Singapore, Trump and Kim signed an agreement to work toward complete denuclearization and a lasting “peace regime” on the Korean Peninsula.
The document, which Trump deemed “very comprehensive,” says the two sides commit to hold follow-up negotiations and to cooperate to develop bilateral relations.
Asked about what the agreement meant for North Korea’s denuclearization, Trump said “we’re starting that process very quickly — very, very quickly.”
Many experts expressed dismay at the agreement, however, saying it lacked a solid commitment by Pyongyang, while others said it was vague as to details.
2. Federal Reserve Kicks Off Policy Meeting
With the Trump-Kim summit now out of the way, investors looked ahead to the start of the Federal Reserve’s two-day policy meeting this morning.
Fed Chair Jerome Powell and his colleagues are widely expected to announce a quarter-point increase in interest rates for the second time this year, as it seeks to normalize monetary policy with the economy showing signs of health.
That would put the fed funds target range in a range between 1.75%-2.0%, inching closer to a neutral policy stance.
With the rate hike almost fully priced in, markets are focusing on whether the Fed will hint at the prospect of four rate hikes in 2018.
The probability of four total rate hikes this year, rather than the three currently forecast by the Fed, have strengthened recently amid signs of rising inflation and strong economic growth.
3. U.S. Inflation Data Eyed
Tuesday’s calendar features the biggest economic data point of the week.
The Commerce Department will publish May inflation figures at 8:30AM ET (1230GMT), with traders watching to see if the data will run hotter-than-expected.
Market analysts expect consumer prices to rise 2.7% on a year-over-year basis, up from 2.5% in April.
Core inflation, which excludes food and fuel, is projected to climb 2.2%, a tad faster than the 2.1%-gain recorded in the preceding month.
Core prices are viewed by the Fed as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories.
The dollar index against a basket of six major currencies was little changed at 93.50.
In the bond market, the U.S. 10-year Treasury yield stood at around 2.96%.
4. U.S. Stocks Set For Small Losses At The Open
U.S. stock futures pointed to small losses at the open, as investors looked past the Trump-Kim summit, and instead focused on the start of the Fed’s meeting and the latest batch of economic data.
At 5:45AM ET (1045GMT), the blue-chip Dow futures were down 18 points, or less than 0.1%. The S&P 500 futures and Nasdaq 100 futures also indicated similar losses at the open for their respective markets.
The largely muted moves in pre-market trade followed a lackluster session Monday, which saw each of the major averages close in the green, though little-changed.
Elsewhere, in Europe, the majority of the continent’s bourses hovered around the flatline.
Earlier, Asian markets were mostly calm, with most of the region’s markets ending little changed.
5. Brexit Showdown In Focus
The Brexit issue returns to the fore, as lawmakers in the House of Commons will begin debating House of Lords amendments to the bill that takes the UK out of the European Union.
Prime Minister Theresa May’s Conservative government runs the risk of losing its bid to overturn some of the amendments if enough Conservative lawmakers decide to vote alongside opposition parties.
The 15 amendments include a measure to keep the country in the EU’s customs union.
On the first day of votes that could further complicate her tortured negotiations to quit the EU, parliament will debate a demand for a “meaningful vote” on any agreement May negotiates with Brussels before leaving the bloc next March.
Such a vote would give the lower house more power to set the government’s “direction” if the house rejects the agreement.
The pound was a shade higher against the dollar, trading at 1.3410 (GBP/USD).
Pound traders also digested data showing the number of people employed in the UK continued to rise in the three months to April, while wage growth slowed.