Here's How Markets Are Reacting to Unprecedented Trump-Kim Talks
(Bloomberg) -- There’s two words to describe investor sentiment in Asian markets after U.S. President Donald Trump agreed to meet North Korean leader Kim Jong Un: risk on.
Equity markets across the region jumped and the yen slid after the White House accepted North Korea’s invitation for a summit that could potentially help defuse tensions along the last remaining tripwire of the Cold War. South Korea’s Kospi Index at one point was up the most since October. Japan’s Topix Index gained as much as 1.8 percent, while stock benchmarks in Hong Kong and Sydney also advanced.
“Plans to hold a summit is a plus, though it will take time for it to lead to an actual resolution,” said Soichiro Monji, a general manager at Daiwa SB Investments Ltd. in Tokyo. "The ‘Korean risk’ factor in Japanese equities will somewhat be reduced, pushing up prices."
Here’s a look at some of the major market moves in the region Friday:
The yen fell at one point most since February as investors turned away from safe-haven assets. Gold also declined, while the cost of insuring South Korean sovereign bonds against non-payment slumped the most since November 2016.
Meanwhile, South Korean tourism and cosmetics stocks are surging on optimism denuclearization talks would lead to a shift in the country’s stance on its Thaad anti-missile defense system. A withdrawal of the system, which China opposes, would boost chances of a travel ban on Chinese package tours being lifted on South Korea.
Questions remain over the long-term impact on markets, with no firm details in place over the summit -- and no guarantees it will happen at all -- while the shadow of U.S. tariffs also hangs over the region.
“The actual talks between the U.S. and North Korea would be short-term positive and is a reason to buy dollar-yen,” said Shigeki Yoshitoshi, Tokyo-based head of Japan foreign exchange and commodities sales at Australia & New Zealand Banking Group. “But given how talks like this have happened before but been betrayed with no material results, for the mid-to-long term, it’s still unclear and would have a limited impact on the markets.”
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