July 5, 2017
United Nations Security Council is set to meet after North Korea’s missile test, Fed minutes are due, and it’s deadline day for Qatar. Here are some of the things people in markets are talking about today.
Yesterday’s rocket test by Kim Jong Un’s regime has been confirmed as North Korea’s first intercontinental ballistic missile, raising the possibility that the country could develop the capability to launch a direct nuclear attack on the U.S. The United Nations Security Council will hold an emergency meeting later today, with Secretary of State Rex Tillerson calling North Korea’s actions a “new escalation of the threat” to the U.S. and its allies. While financial markets in Seoul showed little signs of panic, there were increased indications that investors are seeking to protect themselves from further declines in the won.
At 2 p.m. Eastern Time the minutes of the Federal Reserve’s June 13-14 monetary policy meeting will be published. Investors will be looking for clues as to the timing of the start of the reduction in the bank’s $4.5 trillion balance sheet. Any mention of financial stability concerns, which may force the Fed’s hand to continue tightening, will also be important for markets.
A Saudi-led bloc of nations isolating Qatar is meeting today to discuss their next move as the deadline for the country to comply with a tough list of demands expires. Sigmar Gabriel, Germany’s foreign minister, said he expects Qatar’s response to be rejected after he held two days of talks with both sides. The month-long crisis has seen about $15 billion wiped off Qatar’s stock exchange and the country’s credit outlook cut to negative watch by Moody’s.
Markets quietOvernight, the MSCI AC Asia Pacific Index rose 0.2 percent, while Japan’s Topix index gained 0.6 percent with automakers leading the advance as the yen pared gains against the dollar. In Europe, the Stoxx 600 Index was unchanged at 5:45 a.m. after closing 0.3 percent lower in a very quiet session yesterday. S&P 500 futures were also unchanged.
Composite Purchasing Managers Index numbers for the euro area published this morning showed continued robust growth, with companies now struggling to hire workers fast enough to meet increasing demand. In the U.K., however, the services PMI fell to its lowest level in four months in a warning for the economic outlook. Later today, U.S. crude inventories data will be released, with expectations for a decrease of 2.5 million barrels. Oil was trading lower ahead of that release after Russia was said to oppose any proposal to deepen the OPEC-led production cuts.