President Donald Trump’s plans to meet North Korea’s Kim Jong-Un has boosted markets in Asia, but concerns over a potential trade war following last night’s decision on steel tariffs has investors in a cautious mood ahead of today’s February jobs report.
Global stocks edged higher Friday as investors reacted to news of a potential summit between the U.S. and North Korea that could significantly reduced tensions in the Asia region, but trading was cautious following President Donald Trump’s formalising of trade tariffs and ahead of the Labor Department’s February jobs report.
Early indications from Wall Street futures suggest a neutral start to the trading day, however, although much will change when the jobs report is released at 8:30 am Eastern Time. Contracts tied to the Dow Jones Industrial Average were marked 15 points higher from its Thursday close and those linked to the broader S&P 500 trading 0.25 points, or 0.01%, to the upside.
Trump’s unprecedented meeting with Kim Jong Un, brokered by South Korean President Moon Jae-in, could accelerate North Korea’s intention to give up its nuclear weapons in face of harsh economic sanctions and remove the region’s key geo-political risk if the summit proves successful.
“President Trump greatly appreciates the nice words of the South Korean delegation and President Moon,” the White House said in a statement. “He will accept the invitation to meet with Kim Jong Un at a place and time to be determined. We look forward to the denuclearization of North Korea. In the meantime, all sanctions and maximum pressure must remain.”
The detente helped lift the MSCI Asia ex-Japan index 0.6% into the close of trading, while Japan’s Nikkei 225 advanced 0.47%, as investors balanced the prospects of the meeting against Trump’s decision last night to formalise stiff tariffs on steel and aluminium imports from most of it trading partners.
However, Trump’s move on trade increased investor concern of reciprocation from officials in Europe and Asia, both of which have warned they would react in kind if Trump were to stick to his plans for a 25% tariff on imported steel and a 10% levy on non-American aluminium.
That’s kept European markets in a cautious mood this morning, with the Stoxx 600 benchmark rising 0.02% to 376.70 points ahead of today’s February non-farm payroll report from the United States, which is expected to show employers created 200,000 jobs in the world’s biggest economy and boosted hourly wages by 0.2%.
The figures could prove crucial to the Federal Reserve’s plans to raise interest rates this year, with a faster-than-expected reading wages potentially changing the market’s anticipation from three increases to four between now and the end of the year.
Global oil prices were also supported by news of the talks, with Brent crude futures for May delivery marked 20 cents higher from their Thursday close in New York to $63.81 per barrel while WTI contracts for April gained 12 cents a barrel to $60.24.