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Stocks shake off G7 row on eve of North Korea-US summit

Stocks in the US and EU edged up yesterday as investors shook off the weekend’s chaotic G7 summit ahead of a week packed with diplomatic events, while the euro neared a two-week high on reassuring news from Italy.

A historic summit scheduled for Tuesday between US President Donald Trump and North Korean leader Kim Jong Un helped the S&P 500 rise, helped by gains in utility Sempra Energy.

Trump, in Singapore for the summit, said the meeting could “work out very nicely” as the countries try to narrow differences on how to end a nuclear standoff on the Korean peninsula.

The Dow Jones Industrial Average rose 47.85 points to 25,364.38, the S&P 500 gained 8.63 points to 2,787.66, and the Nasdaq Composite added 19.43 points to 7,664.94.

Sempra Energy proved the biggest driver of the S&P rally, surging 15.4 per cent as of 11.51am after two key shareholders recommended six new directors for the company’s board and urged a strategic review of its business.

The North Korea summit will be followed by meetings of the US Federal Reserve and the European Central Bank, as well as a Brexit bill vote in the British Parliament.

Risky assets were well supported yesterday after comments from Italy’s new coalition government, saying it had no intention of leaving the eurozone and planned to cut debt. The statements pushed Italian stocks up more than 3.5 per cent, while the pan-European FTSEurofirst 300 index rose 0.82 per cent.

MSCI’s gauge of stocks across the globe gained 0.42 per cent.

The gains came despite a Group of Seven summit over the weekend in which Trump upset efforts to show a united front, backing out of an agreement and calling Canadian Prime Minister Justin Trudeau “dishonest and weak”. Trump announced he was withdrawing from the joint communiqué hammered out at the G7 on Saturday, drawing sharp criticism from Germany and France.

But “markets are generally overlooking negative takeaway” from the meeting, said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York, focused instead on the news from Italy. The prospect of it remaining in the eurozone sent Italian borrowing costs down sharply, as the euro rallied 0.29 per cent to $1.18, near a two-week high of $1.1840.

The dollar index, which measures the greenback against a currency basket, fell 0.07 per cent.

US Treasury yields rose ahead of plans by the Treasury Department to sell $54 billion in new coupon-bearing supply, and with the Federal Reserve expected to raise interest rates on Wednesday.

In commodities, oil prices fell in early activity, pulled down by rising Russian production, before regaining momentum later.

US crude rose 0.73 per cent to $66.22 per barrel, and Brent was last at $76.63, up 0.22 per cent on the day.

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