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US stocks retreat as hopes fade on North Korea, trade

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By Agence France-Presse

Downcast remarks on trade and geopolitics from US President Donald Trump on Wednesday sent US stocks lower, turning what had been a relief rally into a slump.

Wall Street’s negative turn ran counter to earlier gains in Europe, where stocks rose and London hit a new high, based on upbeat global sentiment that the chances of a trade war were receding while Italian political worries eased.

China has said it will allow greater foreign access to its stock markets. (AFP / MANILA BULLETIN)

(AFP / MANILA BULLETIN)

Speaking to reporters at the White House where he hosted South Korean President Moon Jae-in, Trump cast doubt on the possibility that a June 12 summit with North Korean leader Kim Jong Un would go forward and also said he was “not satisfied” with the status of trade talks with Chinese.

The double whammy sent a fragile Wall Street south, with the Dow Jones Industrial Average falling 0.7 percent and the broader S&P 500 down 0.3 percent.

Phil Davis of PSW Investments told AFP that, while markets may have felt relief on Monday because the tone had shifted away from confrontation between Washington and Beijing, the ballyhooed trade talks had, in fact, produced little of substance.

“The only concrete concession China made for the moment is lowering tariffs on cars. But President Xi announced it in April,” said Davis, referring to an April 10 speech by Chinese leader Xi Jinping in which he pledged to make the country more accessible to foreign businesses.

A ‘bumpy ride’

“China has nearly done nothing but president Trump is claiming victory.”

Earlier, London was still riding high on the positive sentiment, with the FTSE 100 benchmark index 0.2 percent higher. Frankfurt added 0.7 percent and Paris inched up 0.1 percent.

Milan stocks ended the session 0.5 percent higher, as investors awaited fresh news on the formation of a new Italian government.

“The calming of tensions over Italy, or at least the lack of news, has allowed European equities to hold steady, but the situation will likely act to cap near-term bullish activity in eurozone stocks,” analyst Chris Beauchamp at trading firm IG said.

Stocks rose Monday in a relief rally after the United States and China effectively called a truce in what had been a spiraling trade dispute. US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He said they had agreed to pull back from the brink of a potentially damaging trade war.

However, skepticism over the news crept across Asian trading floors on Tuesday. Shanghai ended flat. Also tempering optimism are worries about higher US interest rates and geopolitical issues.

“Markets are going through a bumpy ride,” Bank of Singapore Investment Strategist James Cheo told Bloomberg Television.

“This trade truce is still in the early days. It’s really a ceasefire, it’s not a peace treaty as yet. The implementation details are still unclear. There is still some caution among Asian investors.”

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