US stocks rise after secret CIA meeting with North Korea revealed

US stocks rose along with oil prices but weakness in the technology and financials trimmed the overall gains even as world politics continues to look healthier.

The S&P 500 Index gained for a third day following a strong start to the earnings season but technology shares were under pressure as IBM tumbled 7.6% after posting weak results.

Oil surged 3% after an industry report showed crude inventories fell, driving energy stocks higher. Top exporter Saudi Arabia says it wants to see the crude price closer to $US80-100 a barrel.

Brent crude futures LCOc1 held steady at $US73.48 a barrel, up $US1.90, or 2.7%. US West Texas Intermediate crude futures CLc1 gained $US1.95, or 2.9%, to settle at $US68.47 a barrel, their highest since late 2014.

The Dow Jones Industrial Average fell 38.56 points, or 0.16%, to 24,748.07, the S&P 500 gained 2.25 points, or 0.08%, to 2708.64 and the Nasdaq Composite added 14.14 points, or 0.19%, to 7295.24.

Treasury yields also rose 2.86% following a Federal Reserve report showing trade concerns still worry markets despite an otherwise solid outlook for the US economy and a concerted effort in the US to reduce tensions with Russia and North Korea.

Elsewhere, copper surged 2.6% to $US3.18 a pound, the highest in five weeks. And nickel surged 8% to $US15,335 per metric ton on the London Metal Exchange, the highest in more than three years, due to worries the metal (used in stainless steel) may be affected by any further sanctions against Russia.

However, the US has notified the Russian Embassy in Washington that there will be no new sanctions against Russia for some time.

In Asia, China’s 10-year bond yield fell after the People’s Bank of China cut the reserve-requirement ratio for banks, part of its efforts to support credit amid a crackdown on shadow lending.

In Europe, the Stoxx Europe 600 Index advanced 0.3%; the UK’s FTSE 100 Index gained 1.3% to the highest in two months and Germany’s DAX Index rose 0.1%.

North Korea high-level talks revealed
CIA director Mike Pompeo made a top-secret visit to North Korea on or around April 1 to meet North Korea’s leader Kim Jong Un to lay the groundwork for a possible Trump-Kim meeting in May or early June.

"Mike Pompeo met with Kim Jong Un in North Korea last week. Meeting went very smoothly and a good relationship was formed," the US president wrote online. "Details of Summit are being worked out now. Denuclearisation will be a great thing for World, but also for North Korea!'

US President Donald Trump says five possible locations are being considered for the meeting with Mr Kim but none are in the US. He also “really believe[s] there is a lot of goodwill … We’ll see what happens …”

The meeting between Mr Pompeo and President Kim marks the highest-level known talks between the US and North Korean governments since 2000 when then-secretary of state Madeleine Albright met Kim Jong Il, the now-deceased father of the current North Korean leader.

Meanwhile, South and North Korea are discussing plans to announce an official end to the military conflict between the two countries that are still technically at war. Mr Kim is expected to formally announce his willingness to denuclearise North Korea when he meets with South Korea’s leader Moon Jae-in next week.

Although the countries can discuss peace, they can't end the Korean War without the involvement of other countries that fought, including the US and New Zealand.

EU threatens WTO action on aluminium
EU Trade Commissioner Cecilia Malmstrom says the bloc had not yet received any guarantees for an exemption from US steel and aluminium import tariffs that lasts beyond May 1 and would not enter into trade negotiations with Washington until an unconditional and permanent exemption is provided.

The European Union is also opposed to offering any concessions to receive a tariff exemption. Along with India, the EU says it will preserve its ability to retaliate against US steel and aluminium tariffs by formally requesting talks on the matter at the World Trade Organisation.

The WTO's Safeguards Agreement requires a country taking a safeguard action to compensate other countries by granting them lower tariffs on other exports. If the country fails to offer compensation, the affected countries may retaliate in kind.

Trade abuzz for Pacific
During his meeting with Mr Trump at Mar-a-Lago, Japanese Prime Shinzo Abe says a bilateral free-trade agreement may be in the works between the two countries.

However, White House chief economic adviser Larry Kudlow says the issue is still undecided.

"As I've said before, this is all on the table. That's why this is such an important meeting. But I don't want to get ahead of that curve. I really don't," he told reporters.

Mr Kudlow emphasised that no decision had been made on whether the US will rejoin the Trans-Pacific Partnership (TPP) yet, which Mr Trump indicted late last week he may wish to do.

"In policy content terms, it's never been to our liking. If we choose to go down that path, however, to 'improve it,' we will have to be convinced that it's worth our while. And I don't think the president is yet convinced of that, to be honest. I don't think he is," says Mr Kudlow.

“For the American side, at the moment, it's more of a thought than a policy, that's for sure," he says.

Mr Trump tweeted about the TPP on Wednesday, saying: “While Japan and South Korea would like us to go back into TPP, I don’t like the deal for the United States. Too many contingencies and no way to get out if it doesn’t work. Bilateral deals are far more efficient, profitable and better for OUR workers. Look how bad WTO is to US.”

It's unclear why Trump mentioned South Korea since the country was not a participant in TPP negotiations and is not a member of the agreement among the 11 remaining participating countries. Mr Trump is also mistaken that there is no way to get out of the deal because Article 30.6 of the final agreement created a withdrawal process similar to the one in NAFTA.

IMF warns on global economy
Threats to the global financial system are rising, with the price of risky assets surging in a manner reminiscent of the years before the global financial crisis, the International Monetary Fund warns.

Downside risks to world financial stability have increased “somewhat” over the past six months, the IMF’s Global Financial Stability Report says.

“Financial vulnerabilities, which have accumulated during years of extremely low rates and volatility, could make the road ahead bumpy and could put growth at risk,” the Washington-based fund says.

“Valuations of risky assets are still stretched, with some late-stage credit cycle dynamics emerging, reminiscent of the pre-crisis period. This makes markets exposed to a sharp tightening in financial conditions, which could lead to a sudden unwinding of risk premiums and a repricing of risky assets.”

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