Thursday’s stock plunge reflected the mistaken assumption that President Trump would do everything to make a summit happen with North Korea, one respected veteran market watcher said.
U.S. stocks dropped on Thursday after President Donald Trump canceled a planned summit with North Korean leader Kim Jong Un, while a slide in oil prices and bank stocks also weighed as investors grappled with fresh U.S. protectionist plans, Reuters reported.
Trump said he canceled a June 12 summit “based on the tremendous anger and open hostility” in Kim’s recent statement.
Sadly, I was forced to cancel the Summit Meeting in Singapore with Kim Jung Un. pic.twitter.com/qEoi9ymUEz
— Donald J. Trump (@realDonaldTrump) May 24, 2018
The move came after North Korean media reported earlier that the country had blown up tunnels at its nuclear test site, which had raised the possibility of the summit.
“The assumption was that the president wanted very much to have this meeting,” Art Cashin, UBS director of floor operations at the New York Stock Exchange, told CNBC.
“You saw a rally when it looked like everyone was getting along,” said Cashin. Trump, Cashin said, looked like “he was going to bend over backwards to get the support of [Chinese President] Xi to work on Kim,” Cashin said.
Cashin predicted to CNBC that stocks could soon rally if investors realize that Trump’s cancellation of the meeting with North Korea is part of the president’s ‘Art of the Deal’ approach.
“We’re back to nose to nose on warfare negotiations and certainly nose to nose on trade policy,” Cashin said.
Trump on Wednesday ordered a national security probe into car and truck imports that could lead to new tariffs, with China calling the move an “abuse” of the clauses and saying it would defend its interests.
The decision added to jitters over the prospects of trade negotiations with China, reignited after Trump called for “a different structure” to any trade deal.
“The markets are adjusting now with lots of uncertainties, with China, North Korea, (and the prospect of) a trade war that could spill over to other parts of the economy and the world,” said Adam Sarhan, chief executive of 50 Park Investments in New York.
(Newsmax wire services contributed to this report).
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