Picture: THINKSTOCK
Picture: THINKSTOCK

New York — US President Donald Trump canceling a planned June meeting with North Korean leader Kim Jong-un sent global shares lower on Thursday, while automotive stocks continued to decline on tariff fears.

Trump, in a letter to North Korea released by the White House, called off the June 12 summit, citing "tremendous anger and open hostility" in a recent statement by the country. The cancellation came just after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.

After the release of Trump’s letter, stocks sank.

On Wall Street, the Dow Jones Industrial Average fell 195.64 points, or 0.79%, to 24,691.17, the S&P 500 lost 16.39 points, or 0.60%, to 2,716.9, and the Nasdaq Composite dropped 41.78 points, or 0.56%, to 7,384.18.

The pan-European FTSEurofirst 300 index lost 0.58% and MSCI’s gauge of stocks across the globe shed 0.42%. As the latest US-North Korea concerns boosted investor appetite for low-risk debt, US 10-year treasury yields fell to a session low of 2.97%.

Gold prices were propelled above $1,300 an ounce on apparently rising tensions between Trump and Kim. Spot gold added 0.9% to $1,305.01 an ounce. US gold futures gained 1.19% to $1,304.90 an ounce.

Meanwhile, some investors interpreted Trump’s message with caution. "I think this is a bit of poker playing, or gamesmanship, that’s going back and forth and it wouldn’t shock me if a week from now, the meeting is back on," said Joe Saluzzi, co-head of equity trading at New Jersey-based Themis Trading.

Automotive manoeuvres

Markets had plenty more to digest, including minutes from the latest US Fed and European Central Bank (ECB) meetings, but in Asian and European trading, it was US plans to investigate automotive imports that caused the biggest moves.

On Wednesday, Trump ordered a national security probe into car and truck imports that could lead to new tariffs, with China calling the move an "abuse" of the clauses and saying it would defend its interests.

Japan’s Nikkei ended down 1.1% after Nissan, Mazda and Toyota all fell. In Europe, BMW, Daimler and Volkswagen (VW) lost between 2.8% and 3.2%.

In the currency markets, Turkey’s lira remained the big mover. It weakened to beyond 4.79 against the dollar, surrendering most of the gains it made a day earlier after the Turkish central bank jacked up its key interest rate by 300 basis points to prop up the plunging currency.

The dollar fell against a basket of currencies and hit a two-week low against the yen, after the US-North Korea meeting was nixed.

Oil prices recorded their largest one-day drop in two weeks amid expectations that Opec would wind down an output deal that has been in place since the start of 2017, due to concerns about supplies from Venezuela and Iran. US crude fell 0.93% to $71.17 a barrel and Brent was last at $79.19, down 0.76%.

Reuters

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