Stocks Creep Higher, Dollar Retreats After U.S.-N. Korea Summit

World stocks crept higher on Tuesday while the dollar turned negative after hitting a three-week high at the end of a U.S.-North Korea summit aimed at the denuclearization of the Korean peninsula.

President Donald Trump and North Korean leader Kim Jong Un pledged to work toward complete denuclearization of the Korean peninsula, while Washington committed to provide security guarantees for its old enemy.

The MSCI All-Country World index, which tracks shares in 47 countries, was higher by less than 0.1 percent on the day. The dollar slipped into negative territory in European trade after earlier hitting a three-week high.

Investors had mixed reactions to the summit, which ended with the signing of a joint statement that gave few details on how the goals set by both sides would be achieved.

“Any de-escalation is good because in the background you always have worries about these situations and if we compare where we were a year ago with talk of fire and fury and the like, we are clearly at a better place,” said Old Mutual Global Investors European fund manager Ian Ormiston, adding trade conversations over the weekend at the G-7 summit were more concerning.

Others, such as RBC Capital Markets’ head of Asia FX strategy Sue Trinh, said although a historic event, there was “nothing particularly game-changing” about the summit and both sides stood far apart on what denuclearization means.

“To the U.S., it means North Korea must deliver complete, verifiable and irreversible denuclearization. To Kim, it means North Korea suspends nuclear and missile tests in exchange for major economic concessions and the U.S. stepping back as torchbearer for the Asian region.”

In Asian equity markets, trading was volatile with Japan’s Nikkei paring early gains to close 0.3 percent higher after earlier rising as much as 0.9 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan seesawed between positive and negative territory, and was last up 0.15 percent. South Korean shares were a tad weaker while Chinese shares were buoyant after starting in the red. The blue-chip CSI 300 index jumped about 1.3 percent.

Europe had a muted open, with the pan-European STOXX 600 index up 0.1 percent.

Investor focus was shifting to the two major central bank meetings later this week. The U.S. Federal Reserve holds a policy meeting on Wednesday, where it is widely expected to deliver its second interest rate hike for the year.

U.S. inflation data due later in the day will also add to speculation over the path for U.S. interest rates later this year. Markets are currently pricing a slightly more than one in five chance of a fourth interest rate hike by the end of the year.

On Thursday, the European Central Bank meets and some expect the Bank to provide guidance for an ending of its massive bond-buying program at the end of this year.

Due at 0900 GMT is the ZEW index of economic sentiment, which may provide markets with a glimpse of whether recent economic data misses in Europe have dented sentiment in corporate Germany.

In currencies, the dollar was 0.1 percent lower against a basket of peers.

On the safe haven yen, the dollar jumped to a three-week top of 110.49 in early deals. It was last at 110.25.

Helping calm markets were comments from Italy’s new coalition government that it had no intention of leaving the euro zone and planned to cut debt.

The euro was just below a three-week high of $1.1840, up 0.1 percent on the day.

In commodities, U.S. crude rose half a percent to $66.39 per barrel, while Brent climbed half a percent to $76.86.

Spot gold slipped 0.2 percent to $1,296.95 an ounce.