It is a brand new world. So say new BFFs Donald Trump and Kim Jong Un after that handshaking, backslapping, promise-to-go-fishing-together-soon gathering in Singapore.
And while POTUS referred to it as “a very great moment in the history of the world,” financial markets could have a slightly different take on it. While there is clearly some relief it wasn’t a G-7-esque fiasco, investors don’t seem too overly impressed either, perhaps because the devil was missing from the details of that deal signed this morning to rid the Korean Peninsula of nukes.
For insight into that wariness here’s our call of the day from Michael Van Dulken, head of research at Accendo Markets. He says the path to trading this particular moment isn’t exactly a straight one, because “a pledge today doesn’t mean action tomorrow.”
“This could yet be a very long journey offering more chances to trade fresh optimism and disappointment,” notes Van Dulken in emailed comments. “But yes, it does remove one element of geopolitical uncertainty which has seen some impressive highs and lows.”
“My guess is that markets take a wait-and-see approach on this one, without being an immediate reason for heightened volatility if both parties leave it unchanged,” says Robeco fund manager Jeroen Blokland in emailed comments.
Wrote this before seeing that Trump has agreed to stop annual war games with South Korea. That is big gain for Kim. This decision ‘reversible’ but that would now signal real heightening of tensions rather than business as usual.
— Lawrence Freedman (@LawDavF) June 12, 2018
And even if the powder stays dry on the Korean Peninsula, and peace and happiness truly do break out, that doesn’t mean investors should expect