Over the weekend, it appears that Trump has decided that his summit with Kim Jong Un is back on! “Our United States team has arrived in North Korea to make arrangements for the Summit between Kim Jong Un and myself,” Trump said in tweet on Sunday afternoon, making no reference to his recent decision to pull out of the meeting.

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Geopolitical Fears Sent the U.S. and Asian Markets Lower

The U.S. and Asian markets closed lower last Friday as geopolitical fears escalated following the U.S. President Donald Trump’s abrupt move to cancel a key summit with N. Korean leader Kim Jong Un.  Trump wrote a letter to Kim last Thursday, announcing the cancellation and scrapping plans for what would have been the first face-to-face meeting between the U.S. and N. Korea.

The summit was canceled by Trump over what he called “tremendous anger” and “open hostility” from N. Korea after its leader attacked Vice President, Mike Pence, for saying “N. Korea would end up like Libya if it did not reach a peaceful deal on its nuclear weapons during the summit”. According to the letter, Trump wrote he was very much looking forward to meeting Kim but due to Kim’s most recent statement, he felt that it is inappropriate to have a face-to-facemeeting. Trump then wrote, “Please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place.” (CNN, 24 May)

The 12th June Summit is Back On!

Over the weekend, S. Korean President, Moon Jae-in told a news conferrence in Seoul that he and Kim, at a surprise meeting on Saturday, agreed  that a possible summit between the U.S. and N. Korea must be held successfully. Today, a Bloomberg article reported that Trump appeared to confirm that his summit with Kim was back on, three days after he abruptly called off the historic meeting. Separately, the White House confirmed that they are sending a team to Singapore to continue preparations.

Market Reaction

The market reacted negatively towards Trump’s abrupt move last Friday, with both the S&P 500 and Dow Jones 30 Index falling 0.2% to 2,721.3 and 24,753.1 respectively. In Asia, the HSI also closed in the red, losing 0.6% to close at 30,588.0. At the time of writing, the HSI futures opened lower this morning while the Nikkei was up 0.3%.

Source: Macquarie Research - 28 May 2018