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The US and North Korea were unable to reach an agreement on denuclearization

  • US President Trump has been meeting North Korean leader Kim Jong Un in Vietnam
  • The summit ended with no agreement because Kim Jong-un asked for all sanctions to be lifted in exchange for closing a main nuclear facility
  • Trump also said he wanted to unlock North Korea’s potential
  • China has said the US and North Korea should “meet halfway” in the negotiations
  • Trade talks between the US and China will continue but the significant progress has been made

The US and North Korea were unable to reach an agreement on denuclearization and this had negative on the financial markets all over the world. US President Trump said that the summit ended with no agreement because Kim Jong-un asked for all sanctions to be lifted in exchange for closing a main nuclear facility. It is important to say that all major currencies and equities fell, the JPY and the CHF appreciated. This tensions dragged US Treasury yields lower and the yen higher, every bad news that is connected with this situation will likely result in some demand for the safe-haven yen and Swiss Franc. Trade talks between the US and China are one of the main events for the investors currently because risk aversion took over the financial world this Thursday. Every bad news that is connected with “trade talks” will likely result negative for all major economies. Trade talks between the US and China will continue but the policymakers from both countries agreed that significant progress has been made. White House economic advisor Larry Kudlow said that the U.S. was heading to a remarkable, historic trade deal with China explaining that they made ‘fantastic progress’.

According to the latest news, the deal is just a matter of time and this positive news returns optimism on the financial markets. This is also positive for all other major economies because the trade war would likely downgrade earnings of a lot of companies all over the world. The ECB´s President Mario Draghi also warned that the uncertainty around China is a threat to economic growth. Chinese President Xi Jinping said that the deal could be reached before the deadline but in my opinion, there is a still long way to complete this deal. The US president Donald Trump said that China’s economic weakness put the United States in a very good position in terms of trade talks. The Chinese economy is heading for a rough start to 2019 and the economy is continuing to slow further.

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