European stocks book a slight loss as Trump-Kim pledge ‘lacks some detail’

European stocks finished slightly lower Tuesday following a closely watched summit between President Donald Trump and North Korean leader Kim Jong Un in Singapore.

How markets performed

The broader Stoxx Europe 600 Index ended 0.1% lower at 387.53, after rising as much as 0.4% early in the session. The oil-and-gas groups and basic-materials sector led decliners, but the utility and consumer-services shares closed higher. On Monday, the index rose 0.7%, the first rise in five sessions.

France’s CAC 40 index reversed course and fell 0.4% to close at 5,453.37. Germany’s DAX 30 index  turned lower and ended with a small loss of less than 1 point at 12,842.30.

In London, the FTSE 100  fell 0.4% to 7,703.81, also giving up early gains.

But Spanish and Italian stocks advanced. Spain’s IBEX 35  picked up 0.2% to finish at 9,914.40, and Italy’s FTSE MIB index rose 0.2% to 22,119.76. That extended Monday’s 3.4% leap, seen after Italy’s economy minister said the country’s new coalition government is committed to eurozone membership.

The euro traded at $1.1791, slightly higher than $1.1785 late Monday in New York.

What drove markets

European bourses started to retreat after posting gains at the open. When trading got under way, Trump and Kim had signed a joint document pledging to work toward the complete denuclearization of the Korean Peninsula, but the statement was criticized for a dearth of detail on the process of verifying Pyongyang’s compliance.

“The lack of a response [in the markets] though may be a reflection of the fact that the agreement still lacks some detail and given the unpredictable and volatile nature of the two leaders, there’s no guarantee that it won’t run into significant difficulties. Still, progress is important which makes today a big success,” said Craig Erlam, senior market analyst at Oanda, in a note.

The meeting was historic as it was the first between a U.S. sitting president and a North Korean leader.

Meanwhile, the Brexit issue returned to the fore, as U.K. lawmakers in the House of Commons debated amendments by the House of Lords to the bill that takes the U.K. out of the European Union. The 15 amendments include a measure to keep the country in the EU’s customs union.

Prime Minister Theresa May’s Conservative government runs the risk of losing its bid to overturn some of the amendments if enough Conservative lawmakers decide to vote alongside opposition parties. Justice Minister Phillip Lee resigned Tuesday, citing the government’s handling of the U.K.’s pending exit from the EU.

Central banks in motion

Beyond geopolitics, traders were focusing on central-bank meetings this week. Federal Reserve policy makers were meeting on Tuesday and markets expect an interest-rate hike on Wednesday. On Thursday, European Central Bank policy makers are expected to announce the timing for unwinding its bond buying. The Bank of Japan will release a policy update Friday.

“There seems to be suggestions that the ECB is going to reduce QE, but I’m scratching my head on how they can actually do that. Industrial production in Germany and France has slowed, credit growth has slowed, retail sales are slowing,” said Kully Sumra, vice president of international services at Charles Schwab, in an interview.

“And the Bank of Japan…looks like they’ve may have reached a cyclical corner and things might be slowing down a little. This week is really going to be marked by a continuing divergence between the three big central banks. The Fed has a very clear path in terms of hiking rates and the ECB and the Bank of Japan, much less so.”

Stocks in focus

French retailer Casino Guichard-Perrachon SA  climbed 1.8%, but pared bigger gains, after it revealed plans to sell noncore assets worth about 1.5 billion euros ($1.77 billion) to accelerate its debt-reduction efforts in France.

Shares of home builder Barratt Developments PLC  lost 3.1%, falling alongside other U.K. home builders, after Crest Nicholson Holdings PLC said its margins were hurt in the first half of the year by house prices that were flat and rising building-cost inflation. Crest Nicholson shares  stumbled 4% on the FTSE 250 midcap index  

Economic data

German economic sentiment in June dropped to the lowest level since September 2012, the ZEW think tank said Tuesday. Its reading of minus 16.1 points was below the reading of minus 13.0 points expected in a FactSet survey of economists. Worries about trade disputes with the U.S. and concerns about Italy’s new antiestablishment, coalition government have weighed on the outlook for Europe’s largest economy, said ZEW.

“On top of this, German industry has been reporting worse-than-expected figures for exports, production and incoming orders for April,” ZEW President Achim Wambach said in a statement.

Basic wages in the U.K. rose 2.8% in the three months to April, the Office of National Statistics said Tuesday. Analysts polled by FactSet were looking for a 2.9% rise in wages excluding bonuses. The unemployment rate remained at 4.2%, meeting expectations.