12.06 - Trump and Un shook hands
- by Anna K.
Historical event took place today. Is there anything left to say? Information on the markets’ reaction is inside.
There was no doubt. If the meeting between the long rivaling countries takes place it is going to be epic. Of course, there were fears too. If the whole thing was going to go bad the fallout from the situation would be actual nuclear fallout as North Korea has been long threatening to the rest of the world to nuke every country that wasn’t very nice to it. and that of course includes the USA. But it seems that everything went better than was expected.
As the two leaders shook hands we all sighed with relief. Looks like there will be peace. But we were also more curious whether today’s markets will be peaceful enough to allow trading. And it seems that there have been some unexpected turns in several sectors. Dollar, as was very anticipated by traders has gone up. Finally. After days and days of losing points against six counterparts greenback has finally reacted positively to the situation in the world. Adding 0.2 percent allowed the greenback to go to the highest position in almost 2 weeks which is a welcome improvement for the American currency.
Although not every economy in the world is going to feel better because of the stronger dollar and improving US economy. Pound and euro are already feeling a little weaker than yesterday with pound hitting the weakest point in a week. Yen is also at the three weeks low. But the most unexpected price change came from oil that jumped by 0.5 percent. So as we can see the situation in the world is now divided. Although there is hope fir reconciliation the abyss between the major world economies can now go deeper and deeper. And it doesn’t help the situation that Americans themselves are pushing their partners away.
We all know that even the strongest need help and support. The same is true for the economies. If Trump plays all his cards wrong there will simply be no one to support US. And that can send not only America into the great financial void, but also the whole world. And recent improvements will be undone.
For decades North Korea has been a rogue country in the Asian family. While other countries in the region were trying to find ways to attract new investments, North Korea remained shut off from the rest of the world, surviving mainly with the help of Russian provision. Until now there is no opportunity for the tourist flow to go into the country and there are hardly any manufacturing plants in the country so the people of North Korea re practically doomed to starve without the outer help. But all of that can soon change as the whole world thinks whether this country will finally open up.
Kim Jon Un surprised everyone when he stated he had had the wish ti meet with South Korean and American Presidents. And there was even bigger and more pleasant surprise when the meetings were actually carried out. There are hardly people in the world who understand what Kim wants exactly and why is the sudden change in politics? What we do know is that he seems ready to denuclearize North Korea. And if that is really the case he is probably ready to open doors to North Korea. For the rest of the world that means new and very interesting investment opportunities.
The rest of the world will have to rebuild the whole country. Can you imagine the scale of investment that will be needed for this? Huge conglomerates will be welcome to place their production plants in the territory of North Korea for the people of the country to get new jobs. But individuals will also be of a big interest. World companies together with local initiatives will surely need all the money in the world as the new country will be built. And that is exactly the moment we all have to look out for.
Everything new and untouched – can you imagine the return percentage of such an endeavor? We for one cant. But we still will be waiting for changes to come.
Although attention of the world is clearly tied to Singapore right now it is worth to remember that there are other aspects of trading life out there which still await much deserved attention. Like oil. Black gold has extended the gains and breached the point of $66 per barrel. Which Is still a long way from the four years maximum that was reached in the middle of May but still a good performance comparing to the previous couple of weeks.
The growth is due to Russia and Saudi Arabia trying to find necessary support in order to lift the restrictions on the output. Although it is not really clear why Russia would try and do something like that. There is absolutely no profitability in oil foot Russia. State Rosneft – which is the oil extraction company hasn’t been profitable for several years. And even if it is the people of Russia don’t see that oil money with almost third of Russian population living in poverty.
But we have to focus on the price growth right now. Venezuela, Iraq and Iran are trying to oppose Russia and Saudi Arabia on the decision. But even this collision doesn’t get in the way of Brent gaining price - $76.78 per barrel is the price right now. WTI oil is also gaining today which is a good sign – means that the traders didn’t let it out of their grip with all the political noise around.
If Russian and Saudi Arabia manage to push their initiative through oil prices will be out of control. Last time they tried to push for this decision WTI breached $72 per barrel point. On the other hand the less in the supply the higher is the price. Tighter supply is not going to lower the price in any case. Right now is the best time to see how instable are the markets and what a huge risk would be considered right now before going into trades. On the other hand those who buying oil and oil futures right now may be in a lot of profit very soon.