Australian dollar declines amid weak GDP data. Short-term martial law was imposed in South Korea

The Dow Jones (US30) fell by 0.17% on Tuesday. The S&P 500 Index (US500) was up 0.05%. The Nasdaq Technology Index (US100) was up 0.31%. Data released on Tuesday showed a modest increase in US job openings for October, while layoffs declined, indicating workers’ confidence in the labor market. US October JOLTS job openings rose 372,000 to 7.744 million, showing a stronger labor market than expectations of 7.519 million. Traders are now focused on Wednesday’s ADP private sector jobs report and Friday’s Non-Farm Payrolls data to gain further insight into labor market trends. Federal Reserve Chairman Jerome Powell is also scheduled to speak in New York on Wednesday afternoon. Markets are currently pricing in a roughly 75% chance that the Fed will cut rates by 25 basis points in December.

Equity markets in Europe rallied on Tuesday. Germany’s DAX (DE40) rose by 0.42%, France’s CAC 40 (FR40) closed higher by 0.26%, Spain’s IBEX 35 (ES35) added 1.18%, and the UK’s FTSE 100 (UK100) closed up 0.56%. France’s political crisis is intensifying. Marine Le Pen’s National Rally party is expected to join forces with a left-wing coalition in a no-confidence vote on Wednesday to topple Prime Minister Barnier’s administration. Swaps discount the odds of a 25bp ECB rate cut at the Dec. 12 meeting to 100% and a 50bp rate cut at the same meeting to 14%.

WTI crude oil prices held near $70 per barrel on Wednesday after rising 2.7% in the previous session, helped by signals that OPEC+ will further delay production recovery, as well as new US sanctions on Iranian oil. The producer group is reportedly close to an agreement to delay the plan to increase production for another three months, with a final decision expected at Thursday’s meeting, easing market fears of oversupply. Meanwhile, the US has imposed sanctions on 35 companies and ships it believes are involved in the transportation of Iranian crude.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) rose by 1.91%, China’s FTSE China A50 (CHA50) gained 1.29%, Hong Kong’s Hang Seng (HK50) added 1.00%, and Australia’s ASX 200 (AU200) gained 0.56%. On Wednesday, Chinese stocks failed to build on recent gains as caution prevailed in the region following political turmoil in South Korea. Adding further uncertainty was the fact that China’s Politburo opted not to release a report on its regular November meeting, which sparked speculation that additional stimulus measures may be forthcoming.

The Bank of Korea announced today that it will temporarily take measures to boost short-term liquidity in response to market volatility caused by the country’s brief declaration of martial law. The Central Bank said in a statement that it has begun purchasing additional repurchase agreements from more financial institutions to boost market liquidity. The move is in line with Finance Minister Choi Sang-mok’s earlier pledge to provide unlimited liquidity support if needed following President Yoon Suk Yeol’s surprise declaration of martial law on Tuesday night.

The Australian dollar fell below $0.645 on Wednesday, hitting its lowest level in four months, as weak GDP data reinforced expectations of an imminent interest rate cut by the Reserve Bank of Australia. The data showed Australia’s economy grew just 0.3% in the three months through September in quarterly terms, missing market expectations of 0.4%. On an annualized basis, the economy grew by 0.8%, well below the projected 1.1%, a growth rate typically seen during recessions. Despite the disappointing data, the RBA is expected to leave rates unchanged at its December meeting, citing persistent inflation.