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FTSE 100 remains subdued in wake of US/North Korea meeting

As experienced traders know, political uncertainty can have a significant, adverse effect on financial markets and the indices that track them.

Therefore, it’s not surprising that tensions between the US and North Korea have kept many indices subdued over the past few months, including the FTSE 100 here in the UK. Many expected the recent meeting between American President Donald Trump and the North Korean leader Kim Jong-un to break the tension and help the markets and indices recover. Interestingly, however, this hasn’t happened.

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Despite the historic meeting between the two heads of state, the FTSE and other market indices remain slumped.

Global Fears Remain

At the time of writing, the FTSE 100 is down 24.0 points to 7,713.5, and it is only recovering very slowly. Of course, it’s important to put this in context. At one point during the current period of uncertainty, traders were worried that the FTSE might actually drop below 7,000 points. The fact that this didn’t occur and the index is now comfortably above the 7,000 point mark is obviously a good thing. But why isn’t it showing more life in the wake of the meeting between Trump and Kim Jong-un?

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Of course, the markets are highly fickle and unpredictable, so there are many possible explanations. However, two stand out.

Trade Wars

One possibility is that unrelated concerns over a possible trade war between the US and the EU could be keeping the markets subdued. Alternatively, the markets may be responding to doubts that the US/North Korea meeting will amount to anything. The Trump administration has been plagued by questions regarding its competence and diplomatic acumen, so doubts that the meeting will provide lasting benefits are understandable.

However, as a trader, you shouldn’t feel too gloomy. If you want to buy stocks or shares in a FTSE 100 company, now might be the perfect opportunity. The FTSE 100’s recovery might be gradual, but there is no reason why it shouldn’t continue steadily for at least a few days. By investing in FTSE 100 stocks and shares now and selling again at a later point in the recovery, you may be able to make a modest profit. Just remember to check the performance of the individual stocks and shares you want to invest in and don’t rely entirely on the FTSE’s overall performance to guide you.

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