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North Korea’s ICBM keeps the world on edge, crude slumps, and the Fed is divided. Here are some of the things people in markets are talking about.
North Korea's successful test launch of an intercontinental ballistic missile is the talk of the globe. An emergency United Nations Security Council meeting was held, with U.S. Ambassador Nikki Haley saying America would go its "own path" if needed to counter this aggression, while France's U.N. ambassador pushed for fresh sanctions against the isolated state. Many world leaders, including Germany's Angela Merkel, South Korea's Moon Jae-in, and U.K. Foreign Secretary Boris Johnson have condemned the test, but agreeing on a course of action may continue to prove difficult. Russia, for its part, said it was against a deployment to North Korea and that sanctions aren't the solution. This missile test is also putting pressure on the U.S. to bolster the defense system that would be used to counter a potential attack. Financially, the South Korean bond market is in the spotlight, bedeviled by rising tensions and the recent chorus of hawkish central bank remarks.
West Texas Intermediate snapped its longest winning streak of the year, tumbling as much as 5 percent Wednesday following reports of Russia's opposition to deeper production cuts. Saudi Aramco also cut prices for its Asian customers in a bid to maintain market share. Crude pared some of its retreat after U.S. markets closed amid a private report that stockpiles fell markedly ahead of Wednesday's official weekly numbers from the Energy Information Administration. For Raymond James analysts, however, this bear market for crude is a product of "fake news." Good times are here though for emerging market bonds and currencies amid the crude downdraft: they've become increasingly insulated from oil's gyrations.
More from Bloomberg.com: U.S. Threatens Trade With Countries Over Support for North Korea
The minutes from the Federal Reserve's latest meeting showed growing concern over persistently soft inflation -- though it wasn’t enough to keep the central bank from hiking rates in June or penciling in another hike by year end. Fed officials are divided on when to begin the process of slimming down the balance sheet as well as whether the initiation of the unwind should prompt them to increase rates at a slower pace going forward. In the communiqué, monetary policymakers also expressed worry about low levels of implied and realized volatility in equities. And with more major central bankers in advanced economies discussing policy normalization, the sell-side is advising investors to consider new trading tactics.
The S&P 500 Index inched higher Wednesday thanks to a rebound in technology stocks that propelled the Nasdaq 100 almost 1 percent higher. One tech stock that wrecked: Tesla Inc. The automaker sank more than 7 percent -- its biggest loss in more than a year -- after the firm's second-quarter production and deliveries report showed shipments declined relative to the first three months of the year. Spring wheat had a rollercoaster ride this session, with prices rising more than 6 percent before proceeding to drop over 5 percent.
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Nikkei 225 futures are flat ahead of the open while S&P/ASX futures are trading modestly to the upside. The MSCI Asia Pacific Index posted a small gain Wednesday, driven by a bounce-back in tech shares that presaged the U.S. session. After Tuesday's plunge, the Hang Sang Index managed to advance 0.5 percent but remained shy of the 25,500 psychological support/resistance level.
