WASHINGTON, U.S. - Touted as a breakthrough summit that was initially planned to lead to North Korea’s denuclearization, the meeting between the U.S. President Donald Trump and the North Korean leader Kim Jong Un ended with what analysts called “nothing particularly game-changing.”
Trump and Kim Jong Un met in Singapore in the historic summit, and pledged to work toward complete denuclearization of the Korean peninsula.
In return, the U.S. has committed to providing security guarantees and Trump even announced plans to end the war games in South Korea - which Pyongyang views as a threat and has been demanding for a long time now.
As the summit wrapped up on Tuesday, world stocks slipped, and the dollar retreated from a three-week high.
U.S. stock futures meanwhile were flat after the summit failed to woo investors.
The MSCI All-Country World index, which tracks shares in 47 countries, fell nearly 0.1 percent.
The dollar, which earlier reached a three-week high, slipped into negative territory in morning trade in Europe.
Subsequently, in Asian equity markets, trading was volatile with Japan's Nikkei paring early gains to close 0.3 percent higher after earlier rising as much as 0.9 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan dabbled between positive and negative, and was last up 0.15 percent.
South Korean shares were weaker.
Chinese shares were buoyant after starting in the red.
The blue-chip CSI 300 index jumped about 1.3 percent.
Europe had a muted open, with the pan-European STOXX 600 index last up less than 0.1 percent.
Futures indicated a lower open on Wall Street.
RBC Capital Markets’ head of Asia FX strategy Sue Trinh said there was “nothing particularly game-changing” about the summit.
Pointing out that both sides stood far apart on what denuclearization means, Trinh said, “To the U.S., it means North Korea must deliver complete, verifiable and irreversible denuclearization. To Kim, it means North Korea suspends nuclear and missile tests in exchange for major economic concessions and the U.S. stepping back as torchbearer for the Asian region.”
Several analysts cast doubt on how effective the agreement signed by the two leaders, which offers very few specifics, would prove to be in the long run at getting North Korea to denuclearize.
Brad McMillan, chief investment officer for Commonwealth Financial in Waltham, Massachusetts said in a statement, “Markets are skeptical. This is more of a case of ‘we’ll believe it when we see it’, rather than actually reacting.”
However, Old Mutual Global Investors European fund manager Ian Ormiston, pointed out, “Any de-escalation is good, because in the background you always have worries about these situations,” adding that trade conversations over the weekend at the G7 summit were more concerning.
As the summit closed, the spread between Italian and German 10-year borrowing costs narrowed, adding a relief rally on reassuring comments from Italy’s new economy minister.
Most Asian markets closed higher, while South Korea’s KOSPO index dipped by 0.1 percent.
European markets posted small gains in early trading.
In currencies, the dollar was 0.1 percent lower against a basket of its peers.
It jumped to a three-week top against the yen of 110.49 and was last at 110.25.
Meanwhile, as a crucial parliamentary debate began on amendments to Britain's European Union withdrawal bill, the British pound was up 0.1 percent and the euro was flat.
Analysts at Accendo Markets warned that the pound could "be a Brexit punchbag ahead of a potential 48 hours of Commons debate and voting on the Brexit Withdrawal Bill.”
U.S. crude was down 0.3 percent to $65.94 per barrel.
Brent crude fell half a percent to $76.07.
Spot gold slipped 0.2 percent to $1,297.64 an ounce.
The market now shifts its focus as investors anticipate interest rate changes to be made by the world’s biggest central banks this week.
On Wednesday, the Federal Reserve will wrap up a two-day meeting on interest rates.
It is expected to raise interest rates from their current level of 1.75 percent to 2 percent as it seeks to normalize monetary policy with the U.S. economy showing signs of health.
In May, indicating moderate inflation pressures, U.S. consumer prices rose marginally amid a slowdown in the pace of increases in the cost of gasoline.
Before that, in April, the Labor Department said Consumer Price Index increased 0.2 percent following a similar gain.
Meanwhile, the core CPI, which strips out the volatile food and energy components, rose to 2.2 percent, year-over-year.
In recent days, policymakers have signaled they would not be too concerned if inflation overshot the target.
On Thursday, the European Central Bank is poised to hold formal talks after a briefing from President Mario Draghi on ending its bond-buying program.
Then, on Friday, the Bank of Japan will meet over June monetary policy decision, but no change to policy is expected.