Asian share
markets inched back into the black on Wednesday as investors wagered the latest
flare-up of tensions on the Korean peninsula would fade away like so many
others.
MSCI's
broadest index of Asia-Pacific shares outside Japan regained 0.3 percent, half
the losses suffered Tuesday when North Korea fired a missile into Japanese
waters.
"North
Korea's success in ICBM test can have some pressure since it means improvements
in missile technology, but the test alone will only have limited impact like
any other missiles launched before," said Kim Doo-un, a foreign exchange
analyst at Hana Financial Investment.
South
Korea's main index rebounded by 0.36 percent and Japan's Nikkei ended up 0.25
percent.
E-Mini
futures for the S&P 500 were barely changed, while yields on 10-year U.S.
Treasury notes dipped 2 basis points to 2.33 percent.
In Europe,
Eurostoxx futures fell 0.3 percent, with the DAX off 0.2 percent and the FTSE
0.1 percent.
A holiday in
the United States and a dearth of major data kept activity muted, though
minutes of the Federal Reserve's last meeting due later in the day could
provide some impetus.
Among the
few releases in Asia was the Caixin/Markit services purchasing managers' index
(PMI) for China which dropped to 51.6 in June, from 52.8 in May.
North Korea
said it had conducted a test of a newly developed intercontinental ballistic
missile that can carry a large and heavy nuclear warhead.
South Korean
and U.S. troops fired missiles into the waters off South Korea to show their
deep strike precision capability.
U.S.
Secretary of State Rex Tillerson called for global action against Pyongyang's nuclear
threat, though it was not entirely clear what new steps could be taken.
All the
saber rattling gave the safe-haven yen an early lift, but the dollar soon
steadied at 113.20 yen. Gold was a slim 0.1 percent firmer at $1,226.10 an
ounce.
Moves were minor
with the euro steady at $1.1356 and the dollar index down a fraction at 96.182.
NOT ALL
TOGETHER
Investors
awaited minutes of the Fed's June meeting to gauge how committed it was to
hiking rates gain this year and any detail on plans to wind back its massive
balance sheet.
"In the
May minutes, 'a couple' of participants worried that tight labor-market
conditions could pose an inflationary risk, while 'several others' saw a
downside risk for inflation," said Kevin Harris, a director at Roubini
Global Economics.
"We
will look for any shift between those two concerns."
Markets
imply around a 60 percent chance of another rate rise in December and a much
shallower path of future increases than most Fed members.
Indeed,
while some other central banks had recently sounded more hawkish, signs were
any unwinding of stimulus globally would not be a synchronized affair.
The chief
economist at the European Central Bank noted healthier inflation was
"crucially contingent" on policy staying easy, while Sweden's central
bank sounded reassuringly cautious even as it acknowledged further rate cuts
were now unlikely.
Australian
policy makers showed no inclination to go down the hawkish route given subdued
inflation and a desire to restrain the local currency.
In commodity
markets, oil was trying to stabilize around $50 a barrel on tentative signs
that U.S. crude production might be slowing.
Brent edged
down 5 cents to $49.56, having opened the week with its biggest one-day rally
since December, while U.S. crude lost 9 cents to $46.98.
Reuters
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