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Asian markets declined following South Korea’s political turmoil, triggered by a brief declaration of martial law that unsettled investors. The MSCI Asia Pacific Index fell by 0.3%, while the Kospi Index dropped as much as 2.3%. Japanese shares remained stable, while those in mainland China dipped. The Won appreciated after a decline in offshore trading. The unexpected declaration of martial law by South Korean President Yoon Suk Yeol late Tuesday, later rescinded, has thrown the nation into political turmoil, prompting calls for his impeachment by the opposition. The uncertainty surrounding this significant economy, a key player in global trade, has increased investor apprehension in Asia, especially with Trump’s potential return and China’s economic challenges dampening sentiment. Oil prices have stabilised after experiencing the largest increase in over two weeks. Gold prices steadied after a rise on Tuesday, driven by the political instability in South Korea and France, which heightened demand for safe-haven assets.Political unrest monitoring shifts to Europe this morning as French lawmakers prepare to vote on no-confidence motions on Wednesday, which could bring down the unstable coalition government. French bond futures are under pressure, as are European futures, while the euro hovers close to a two-year low reached in November, just ahead of the critical vote for the eurozone’s second-largest economy. PMI data from the region is expected to shed more light on the economic situation. Investors have reacted negatively to French assets amid the political crisis, with the gap between French bonds and the German benchmark widening further and a sell-off in the euro gaining momentum. Since President Emmanuel Macron called for snap elections in early June, France’s CAC 40 has fallen nearly 10%, making it the biggest loser among major EU economies. The single currency has also declined by nearly 4% during the same timeframe.Meanwhile, market expectations for ECB easing have been shifting towards a gradual approach. After previously anticipating significant cuts, the likelihood of a 50bp reduction in the next two meetings has decreased, while the chances of a 25bp cut in April and June have risen. Long-term risks like political instability, an ongoing economic slowdown, and geopolitical threats influence this change. ECB officials, including President Lagarde and Vice President Guindos, advocate for a data-dependent, gradual easing strategy, with even dovish members not supporting large cuts. Consequently, recent ESTR rate movements align with the ECB’s gradualist communication, suggesting this trend may persist.
Overnight Newswire Updates of Note
(Sourced from reliable financial news outlets)
FX Options Expiries For 10am New York Cut (1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
CFTC Data As Of 29/11/24
Technical & Trade ViewsSP500 Bullish Above Bearish Below 6000
EURUSD Bullish Above Bearish Below 1.0450
GBPUSD Bullish Above Bearish Below 1.26
USDJPY Bullish Above Bearish Below 154
XAUUSD Bullish Above Bearish Below 2600
BTCUSD Bullish Above Bearish Below 92000
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