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Asian, Global Markets Poised For Trump-Kim Summit On Tuesday

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Asian equities mostly posted slight gains on Monday in a day of action that saw President Donald Trump express hopes for good talks with North Korean leader Kim Jong Un in Singapore on Tuesday that have the potential to start a new era in North Asian diplomacy, or revive fears of conflict.

MSCI's broadest index of Asia-Pacific shares outside Japan recovered from an early dip to post a 0.2% gain, while Hong Kong's Hang Seng rose 0.3% and the Shanghai Composite Index eased 0.5%.

Christy Tan, head of markets strategy with National Australia Bank said the talks due to start with an official handshake around 8:30 am Singapore time on Tuesday have the potential to reshape a tense nuclear standoff that has led to concerns of a miscalculation.

"Markets from the dollar to gold and equities will react to the summit, which is expected to be a start in reaching a way forward on de-escalating tension on the Korean Peninsula, but that could also go wrong if Trump is not convinced of Kim's sincerity," Tan said. "An unexpected outcome would weigh heavily."

Trump said on Monday his historic summit with Kim could "work out very nicely" as officials from both countries met to narrow differences on how to end a nuclear stand-off. Secretary of State Mike Pompeo said the preparatory talks were moving quite rapidly and "and we anticipate that they will come to their logical conclusion even more quickly than we anticipated."

The summit provides "an unprecedented opportunity to change the trajectory of our relationship and bring peace and prosperity" to North Korea, Pompeo told a news conference on the eve of the summit.

Trump had earlier unsettled markets on Monday in early Asia after leaving the G-7 summit in Canada with hard words for Prime Minister Justin Trudeau for challenging views on global trade and allied support, with the president declining to sign the official communique.

"This G-7 could be seen as posturing by Trump and the US allies," Tan said. "But the summit, as Trump has said, is a 'one time offer.' "

US stock index futures pointed flat after dropping as much as 0.3% in Asia. The MSCI world equity index, which tracks shares in 47 countries, was up 0.1%. The week is already a key one with central bank meetings in the U.S., Japan and Europe scheduled. The Fed is expected to hike by 25 basis points and update its rate views, while the ECB is likely to signal on Thursday that its 2.55 trillion euro bond purchase scheme will end this year, a major move in dismantling crisis-era stimulus.

The dollar index against a basket of six major currencies was 0.1 percent up at 93.67. Brent crude futures fell 1.1% to $75.66 a barrel and WTI eased more than 1% to $64.93 a barrel.

Spot gold was down 0.2% at $1,295.21 per ounce.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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