Setback as Donald Trump cancels North Korea summit
Market reaction muted, with Dow Jones dropping 0.79%, while gold ticks up and rand firms
Washington — US President Donald Trump on Thursday called off what would have been a historic summit with North Korean leader Kim Jong-un scheduled for June, even after North Korea followed through on a pledge to blow up tunnels at its nuclear test site.
Trump called his decision to cancel the summit a setback for both North Korea and the world and said that the US military was better prepared than ever in the event of conflict on the Korean peninsula.
Shortly after Trump’s announcement, 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 0.6%, to 2,716.9 and the Nasdaq composite dropped 41.78 points, or 0.56%, to 7,384.18.
On the JSE, gold shares found favour on a firmer gold price, which rose 1% on the news that Trump had cancelled his proposed Singapore meeting with Kim. The gold price was 0.93% up at $1,305.45/oz at the close. Gold miners also firmed in safe-haven trade.
Sadly, based on the tremendous anger and open hostility displayed in your most recent statement, I feel it would be inappropriate, at this time, to have this long-planned meetingDonald Trump
Having earlier traded flat against the dollar, at 6.38pm the rand was at R12.4025/$ from Wednesday’s R12.4509.
The US dollar weakened broadly — particularly against the Japanese yen, which climbed to a two-week high against the greenback.
In a letter to Kim, Trump announced his abrupt withdrawal from what would have been the first meeting between a serving US president and a North Korean leader.
A White House official said a North Korean official’s condemnation of Vice-President Mike Pence as a “political dummy” was “the last straw” that led to cancelling the summit.
“Sadly, based on the tremendous anger and open hostility displayed in your most recent statement, I feel it would be inappropriate, at this time, to have this long-planned meeting,” Trump wrote to Kim. “Please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place.” Trump called it “a missed opportunity” and said he hoped to meet Kim someday.
Earlier on Thursday, North Korea repeated a threat to pull out of the summit with Trump and warned it was prepared for a nuclear showdown with Washington if necessary.
Trump’s letter to Kim also referred to the possibility of war. He said the US military was ready if necessary in the event of a conflict on the Korean peninsula. “You talk about your nuclear capabilities, but ours are so massive and powerful that I pray to God that they will never have to be used,” he said.
The reference to Pence that offended the White House came in a statement released by North Korean media and citing Deputy Foreign Minister Choe Son-hui. She called Pence a “political dummy” for comparing North Korea — a “nuclear weapons state” — to Libya, where Muammar Gaddafi gave up his unfinished nuclear development programme only to be later killed by Nato-backed fighters.
“Whether the US will meet us at a meeting room or encounter us at nuclear-to-nuclear showdown is entirely dependent upon the decision and behaviour of the US,” Choe said.
South Korea’s presidential Blue House appeared taken off guard by Trump’s letter and an official said it was “trying to figure out what President Trump exactly meant”.
A few hours before Trump announced the cancellation, a small group of international media selected by North Korea witnessed the demolition of tunnels at the Punggye-ri site on Thursday, which Pyongyang said was proof of its commitment to end nuclear testing.
UN Secretary-General Antonio Guterres said: “I am deeply concerned by the cancellation of the planned meeting ….”
Britain was disappointed at the cancellation of the planned meeting, a spokeswoman for Prime Minister Theresa May said on Thursday. “We need to see an agreement that can bring about the completely verifiable and irreversible denuclearisation of the Korean peninsula and we will continue to work with our partners to this end.”
China was not surprised by the collapse of the summit given the recent signals that had come from Trump, a government official said.
Reuters and AFP