Global Market Quick Take: Asia – December 4, 2024

Key points:

• Macro: South Korea’s political instability inn focus
• Equities: Meta reaches new record high after gaining 3.5%
• FX: USD ended the day flat despite better JOLTS data
• Commodities: Oil rose on Iran crude sanctions, ahead of OPEC+ meeting
• Fixed income: German bonds finished their longest run of gains since 2020

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Disclaimer: Past performance does not indicate future performance.

Macro:

• South Korea’s President Yoon Suk Yeol declared martial law, which was later reversed after both ruling and opposition lawmakers voted against the measure. The move leaves his leadership in a precarious position and brings the focus on political instability in South Korea. Authorities are stepping in to limit the impact to markets, with Bank of Korea scheduling a special meeting this morning after a surprise rate cut last week.
• US job openings were hotter-than-expected, signaling a still-strong labour market. Headline JOLTS increased to 7.744 million from a revised 7.372 million, surpassing the expected 7.475 million. The vacancy rate ticked up to 4.6% from 4.4% (revised down from 4.5%), while the quits rate rose to 2.1% from 1.9%.

Equities: 

• US- The S&P 500 reached a new record close, and the Nasdaq 100 rose by 0.4%, with Meta reaching new record highs after gaining 3.5% while Palantir resumes its climb by adding 6.8% to close at $70.96.
• Salesforce exceeded Wall Street estimates for Q3 revenue and increased its annual forecast due to strong demand for its enterprise cloud services. Shares climbed 10% in extended trading. Q3 revenue grew 8% to $9.44 billion, exceeding the $9.35 billion analyst estimate.
• Okta reported quarterly earnings of $0.67 per share, surpassing the Zacks Consensus Estimate of $0.57, marking a 17.54% earnings surprise. This compares to $0.44 per share from the previous year. In the prior quarter, Okta also exceeded expectations with earnings of $0.72 per share versus the anticipated $0.61, delivering an 18.03% surprise.
• China- Hang Seng gained a further 1% yesterday as the market begins to price in a possible stimulus announcement in the planned Economic Work Conference next Wednesday.
• Europe – Most European indices including the CAC40 recovered after Macron says he believes France can survive a No-confidence vote today and he will not resign until his mandate ends in 2027. CAC40 +0.26% and DAX +0.42%.
• Earnings – Chewy, Foot Locker, Dollar Tree, Synopsys, Royal Bank of Canada

FX:

• USD ended the day flat but had weakened earlier despite better-than-expected JOLTS data and hints from Fed officials about possible future rate cuts. Attention is now on upcoming data releases, including the ISM Non-manufacturing report, and comments from Fed Chair Powell.
• EURUSD gained slightly, recovering from recent French political challenges, moving above 1.0500. However, its gains were limited as French PM Barnier faces a no-confidence vote on Wednesday.
• JPY was stronger early on, with USD/JPY trading below 150.00, but it rose from the day’s lows after briefly dipping below 149.00

Commodities:

• WTI crude oil futures rose over 2.5% to $70 due to US sanctions on Iranian oil and potential OPEC+ production cut extensions. The US also sanctioned 35 entities involved in illegal Iranian oil shipments. Brent crude futures rose more than 2.5% to $73.6.
• Gold increased by 0.17% to $2,643, supported by a weaker US Dollar despite rising Treasury yields. Traders overlooked positive US jobs data, with job openings rising, indicating a strong labor market. Silver climbed above $31.
• US natural gas futures fell over 4% to $3.07/MMBtu due to rising production and milder weather reducing demand. Analysts expect prices to rebound in 2025 with increased LNG export demand after a 2024 decline.

Fixed income:

• Treasuries were volatile, with an early flight-to-quality bid diminishing and resulting in afternoon losses. Futures block trades impacted price movements. The front-end yields ended slightly richer, while the rest of the curve cheaper by 2 to 3 basis points, steepening the curve.
• French bonds outperformed with a no-confidence vote scheduled. German bonds ended their longest winning streak since 2020, with traders expecting 28 basis points of ECB cuts next week and trimming next year's bets. Gilts fell after a four-day rise, with BOE rate-cut expectations steady at 1 basis point this month and 82 by next year's end.

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