Morning Wrap (09.12.2024)

• We are about to start a new week of trading on financial markets. During the Asian session today, we have seen relatively large declines in the quotations of individual indices, with the largest slips currently observed on the Korean KOSPI.

• The index is currently losing nearly 2.7% and is trading at the lowest levels seen since April 2020 after the impeachment of President Yoon failed.

• The Korean won itself weakened against the USD by nearly 0.8 cents, losing the most on an intraday basis since August 2022. 

• Prime Minister Han Duck-soo announced Sunday that the president will withdraw from managing state affairs, including diplomacy, but will remain in his position.

• The prime minister and Han Dong-hoon, leader of Yoon's conservative People Power Party, said they would cooperate on operational issues related to “national management.” However, they did not specify what this would look like in practice, nor did they give a timetable for Yoon's departure.

• Investors also learned the all-important data on inflationary pressures in China, where the reading for November was +0.2% y/y (+0.5% was expected), while PPI came in at -2.5% y/y (-2.8% was expected).

• The situation in Asia's main economy is not improving, leading Fitch to downgrade China's economic growth forecasts for 2025 and 2026. GDP growth in 2025 is projected at 4.3%, down from an earlier forecast of 4.5%. China's 2026 GDP growth, meanwhile, was revised to 4.0% from 4.3% in September.

• Slightly better data were announced from Japan. Japan's revised Q3 GDP came in at +0.3% q/q (it was initially expected to be +0.2%).

• The New York Times reports that Israeli ground forces have entered Syrian territory, and Bashar al-Assad and his family have been transported to Moscow, where they have been granted political asylum. The weekend's turmoil in the Middle East is causing WTI oil prices to gain nearly 0.7% today. 

• In the currency market itself, however, we are not seeing an excessive jump in volatility. The exception to this situation, however, is, to some extent, the New Zealand dollar, which is losing quite a lot, following comments by the Prime Minister about his willingness to cut interest rates. 

• Precious metals, including gold and silver, are gaining an average of 0.3% at the moment, holding in general consolidations. However, slightly worse sentiment is observed in cryptocurrencies, with Bitcoin once again falling below $100,000 and Ethereum below $4,000. 

Heatmap of the volatility currently observed in the FX market. Source: xStation