Markets wobble ahead of G7 as Trump attacks allies on Twitter
As tensions rise, risk aversion has returned to the markets, with equities across the globe sinking overnight ahead of the contentious meeting. All of Asia and Europe’s key indices are trading in negative territory at the time of writing, while US stock futures for the NASDAQ and S&P500 also fell today. Investors are worried that bad-blood between the leaders at the summit could lead to an escalation of a trade conflict, bringing with it negative consequences for the world economy and thus more volatile stock markets and lower shareholder returns.
Fortunately, there may be a brief boost to global indices once again, if Trump’s meeting with North Korea’s Kim Jong-un proves to be fruitful when they meet in Singapore on June 12th. Given the back and forth rhetoric over the last year which included the President saying the DPRK would be met with “fire and fury” if it instigated any military confrontation with the US, it still seems surreal that a positive outcome can be gained, but given the unpredictability of the Trump administration and the North’s willingness to release American hostages and blow up a key nuclear test site, hopes are high.
In non-market related news, there was a morsel of positivity for the Trump team today, as the NATO Secretary General Jens Stoltenberg confirmed that allies in NATO had raised their defence spending by 3.82% over the past year, with more putting forward plans to reach the required 2% of GDP they are each supposed to give by 2024. This wouldn’t have been possible without Trump’s urging.
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