Wall Street Unresponsive to Summit with North Korea

by | Jun 13, 2018 | NEWS

The stock markets were mostly unaffected by Monday evening’s summit between President Trump and North Korean Leader Kim Jong Un.

While the markets did rise slightly at the opening bell Tuesday morning, they leveled off fairly quickly as investors moved on to other issues.

The looming trade war with China, tariffs against Canada, Mexico, and the EU, and the next Fed rate hike set to take place Wednesday seem to be bigger concerns at the moment.

While both President Trump and Kim Jong Un have reaffirmed their commitment to the denuclearization of North Korea, and a statement toward that end was signed by both parties, this summit was just the first step in a long diplomatic process between the two nations. And while it was a monumental step in the right direction, it doesn’t appear to have been enough to drive markets up.

Analysts are speculating that the relative quiet in the market is due to the hesitation of investors to make big moves before knowing the outcome of the Fed’s two-day meeting which began Tuesday.

While it’s a pretty sure bet that the interest rate will increase another quarter point, there is some speculation that the Fed will decide on a fourth interest rate increase this year instead of the previously stated three.

The increase will mean higher interest rates on loans and on investments. House prices will certainly be affected as will credit card debt. In this type of economy, investors may decide to move their money from higher-risk stocks to safer, interest-bearing accounts hoping for a better return and to offset the increase in interest payments.