Markets on Edge as Political Crisis in South Korea

Global markets react to South Korea’s political crisis, with Kospi down 2.5%. Asia’s performance is mixed, but US markets remain steady. Oil gains as gold dips.

Global Markets Overview

Global markets displayed a mixed reaction on Monday as South Korea’s political unrest triggered sell-offs in the country’s equities, while other major Asian indices showed modest movement. The turmoil, centered around President Yoon Suk Yeol’s survival of an impeachment vote and subsequent criminal investigation, weighed heavily on investor confidence.

South Korea: Kospi and Kosdaq Plunge

South Korea’s Kospi index fell sharply, dropping 2.5%, while the Kosdaq saw a steeper decline of 4.4%. The political crisis escalated over the weekend after Yoon briefly declared martial law, and prosecutors subsequently named him the subject of a criminal investigation for alleged treason and abuse of power. Opposition-led impeachment proceedings and signals from the ruling party’s leadership that Yoon may consider resigning have exacerbated market uncertainty.

Asia-Pacific Markets Mixed

Elsewhere in Asia, equity performance was mixed:

• Japan’s Nikkei 225 increased 0.07%, supported by a positive revision to the country’s Q3 GDP growth, now estimated at 0.3% quarter-on-quarter. The broader Topix index gained 0.2%.
• China’s Shanghai Composite slipped 0.14%, while the CSI 300 fell 0.5%, as November consumer price growth missed expectations, rising just 0.2% year-on-year.
• Hong Kong’s Hang Seng index dropped 0.57%, reflecting continued investor caution over Chinese economic data.

Australia’s ASX 200 barely moved, ticking up by 0.02%.

Markets on Edge as Political Crisis in South Korea

Commodities and Bonds

• Gold prices eased slightly, down 0.14% to $2,659.35, while silver fell 0.48% to $31.40.
• Oil prices gained amid supply concerns, with Brent crude rising 0.46% to $71.40 and WTI crude climbing 0.49% to $67.27.
• Bond yields were steady, with the US 10-year yield at 4.143%, the UK 10-year yield at 4.275%, and Germany’s 10-year yield at 2.1125%.

U.S. Market Recap

The US stock market ended last week mixed:

• The S&P 500 gained 0.25% to close at 6,090.27, and the Nasdaq Composite rose 0.81% to 19,859.77, led by strong performances in Tesla, Meta Platforms, and Amazon.
• However, the Dow Jones Industrial Average dipped 0.28%, closing at 44,642.52.

For the week, the S&P 500 and Nasdaq notched their third consecutive weekly gains, rising 0.96% and 3.34%, respectively, while the Dow shed 0.6%.

Economic Data and Upcoming Events

• In the US, November’s non-farm employment change came in at 227,000, surpassing expectations of 218,000, though the unemployment rate edged up to 4.2%, slightly higher than the forecasted 4.1%.
• In Canada, employment data was mixed, with 50.5K jobs added, well above expectations of 24.7K, but unemployment rose to 6.8%, higher than the predicted 6.6%.

Investors are considering releasing the USD Final Wholesale Inventories data at 03:00 PM GMT, which could provide further insights into the US economic outlook.

Conclusion

South Korea’s political turbulence has cast a shadow over regional markets, with the Kospi and Kosdaq bearing the brunt of investor anxiety. While other Asian indices remain relatively stable, global markets will closely monitor developments in South Korea alongside key economic releases and geopolitical trends shaping sentiment.

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