U.S. Stocks See Muted Start ahead of a Busy Week

By Joyce Yu

Philadelphia, PA–U.S. stocks remain largely unchanged Monday as investors ignore noises from G-7 meeting over the weekend at which President Donald Trump lashed out at U.S. allies. The Dow Jones industrial average gained 22 points, with losses in McDonald’s and Apple offsetting gains in Goldman Sachs and Boeing. Investors adopt a wait and see approach ahead of historic summit between leaders of the United States and North Korea, as well as meeting of major central banks.

“The week seems to be starting in risk-friendly, G-7-ignoring mood,” Kit Juckes, a global strategist at Societe Generale SA, wrote in a note. “Maybe the Fed can hike dovishly not to worry markets, maybe we’ll see a temporary easing of euro-tensions let the currency trundle around in a range for a bit, but I’m not in the least inclined to be lulled into a false sense of security. Monday morning trades tell us little.”

“Trump doesn’t care about convention at all. Therefore it creates an air of unpredictability that markets don’t really like,” Maris Ogg, president at Tower Bridge Advisors, told CNBC. “Politics doesn’t usually play a chance in short-term market movement. But there’s a chance this week it could spill over and impact sentiment.”

At the two-day G7 summit, Trump criticized Canadian counterpart Trudeau of “betrayal,” saying that the prime minister’s comments on U.S. tariffs were “very dishonest & weak.” He also refused to endorse the joint G-7 statement that called for a reduction of tariffs — sparking tensions between him and leaders of U.S. allies.

The tumultuous trade talks ended as the U.S. president headed to Singapore, where he’s set to meet with North Korean leader Kim Jong Un on Tuesday. The two are expected to discuss denuclearization and trade relations, amongst other subjects.

The White House says Trump will address the media on Tuesday following his summit with Kim and depart Singapore at approximately 8 p.m. local time for the United States, instead of the original departure on Wednesday morning as talks are moving “more quickly than expected.”

CNBC’s analysis using Kensho shows Chinese stocks are set to benefit if the two leaders come closer to a resolution since the majority of North Korea’s trade is with China. Korean stocks are expected to gain as well. But when worries about North Korea’s nuclear threat escalate, European and emerging market stocks are among the worst performers.

Separately, major central banks will hold policy meetings this week. These include the Fed which is expected to raise interest rates Wednesday, while European Central Bank officials are poised to hold formal talks on ending its bond-buying program Thursday. The Bank of Japan meets Friday, with no change to policy expected.

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