US stocks have dropped sharply following Donald Trump’s announcement that the summit with North Korea has been cancelled.
The benchmark S&P 500 Index fell by more than half a percent in the 10 minutes after the US president’s news that the event, planned for next month, would not go ahead.
By 11.10am eastern time (4pm UK time), it was down by 0.7%.
The Dow Jones industrial average lost 0.71%, while the Nasdaq composite shed 47 points, or 0.7%. Both later regained some of their lost ground but were still down on the previous day.
The FTSE 100 closed 0.9% down, while Paris fell 0.3% and Frankfurt lost 0.9%.
The US dollar fell, particularly against the Japanese yen, which is seen as a safehaven currency in times of trouble. For a similar reason, metal prices were up – gold by 1.2% per ounce and silver by 1.4%.
Investors also turned to US treasury debt for safety, sending the yield on the 10-year note, which moves inversely to its price, down to a 10-day low.
Image: Donald Trump wrote to Kim Jong Un to cancel the meeting
Mr Trump had been due to meet North Korean leader Kim Jong Un in Singapore on 12 June but said in a letter on Thursday that he was cancelling over recent “nuclear showdown” comments from Pyongyang.
“Sadly, based on the tremendous anger and open hostility displayed in your most recent statement, I feel it would be inappropriate, at this time, to have this long-planned meeting,” he wrote.
“Please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place.
“You talk about your nuclear capabilities, but ours are so massive and powerful that I pray to God that they will never have to be used.”
The US markets had already been lower due to a fall in oil prices and fears Mr Trump would further complicate trade negotiations with China, with an investigation ordered on Wednesday possibly leading to new tariffs.
Liz Ann Sonders, chief investment strategist at Charles Schwab, New York, said: “Sure, the (North Korea-US) summit was seen as a positive and it being called off is, I suppose, a negative.
“But I think the weakness in the market is broader.”
Image: Mr Trump says the meeting is off, ‘to the detriment of the world’
Atlanta Federal Reserve president Raphael Bostic told CNBC that the summit cancellation was a “surprise”, adding that such “geopolitical risks really do have implications for how business will take place”.
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London Capital Group analyst Jasper Lawler said: “Shares took a turn for the worse in the afternoon with global geopolitics in the driving seat.
“It was only when the US president doubled down on the political uncertainty by cancelling his planned meeting with North Korea leader Kim Jong Un that European indices turned lower.”