Stocks in South Korea rallied and the Korean won firmed on Friday after South Korea revealed that US president Donald Trump had agreed to meet North Korean leader Kim Jong Un.
The Kospi composite index surged 1.5 per cent in early trading in Seoul with all market segments higher after South Korea’s national security director told reporters in Washington that Mr Trump would meet Kim by May “to achieve permanent denuclearisation”.
The won also firmed as much as 0.6 per cent to Won1,066.81 per dollar.
The announcement marks a breakthrough in communications after the two leaders have traded threats of nuclear war over twitter and television for months, although senior US officials remain deeply sceptical about the prospects for any deal.
Mr Trump said on Twitter:
Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze. Also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!
Amid the easing tension J.P. Morgan Asset Management global market strategist Kerry Craig said geopolitics might start to have a weaker impact on the markets.
“We welcome the de-escalation of conflict on the Korean Peninsula, but it is early days and almost impossible to say that the tensions will disappear completely,” Mr Craig said. “Geopolitics will continue to weigh on markets, but we think they will be a less defining feature, as the more significant influence on markets will be the earnings outlook.”