US market witnessed a rather lacklustre demand from investors on Tuesday, December 3, 2024, as they remained cautious about buying assets related to South Korea whose President Yoon Suk Yeol declared martial law and in less than an hour announced to lift the rule in the early hours of Wednesday. The tension is high in South Korea. Apart from this, investors took a wait-and-watch approach as they eyed US job data and US Federal Reserve's chair Jerome Powell's speech scheduled later on December 4.
South Korea Martial Law:
In a drastic turn of events, the parliament of South Korea was surrounded by its army on Tuesday, after President Yoon Suk Yeol declared nationwide martial law. The actions of President Yoon took place as he believed that pro-North Korean forces were plotting to overthrow a vibrant democracy of theirs. However, his martial law received massive disagreements among both the opposition and many members of his party, which led to a majority voting to remove the rule before daybreak.
Thereby, President Yoon announced to lifting of military rule in the early hours of Wednesday, upon the rejection. This would be South Korea's first martial law in over four decades.
In banking giant, ING's view, the government and financial authorities announced that they would provide unlimited liquidity to the market until it returned to normal. Korean financial markets will open as usual and there will be an extraordinary meeting of the Monetary Policy Committee this morning. We think the Bank of Korea will not make any rate decision today but will likely deliver messages that they will continue to work to stabilize the financial markets. The KRW went up to 1440 overnight but came back down to 1417.
ING pointed out that Martial law itself has been lifted but this incident creates more uncertainty in the political landscape and the economy. Now the opposition party has called on President Yoon to resign, but it is not clear what the president will do. He has cancelled a meeting scheduled for today.
"We are concerned that these events could impact South Korea's sovereign credit rating, although this is uncertain at this stage. However, this is a scenario that could happen. At this stage, we do not expect any changes to the ratings themselves as we do not see the situation escalating further. However, the situation is quite fluid, and it is possible that the rating outlook could change," ING's note added.
US Market On December 3, 2024:
Dow Jones: The Dow Jones Industrial Average or DJIA index ended at 44,705.53, down by 76.47 points or 0.2%.
S&P 500: The index closed at 6,049.88, which was marginally up.
Nasdaq Composite: The tech-heavy index ended at 19,480.91, up by 76.96 points or 0.40%, outperforming its counterparts.
According to Trading Economics data, the S&P 500 edged to a new record close on Tuesday, and the Nasdaq 100 gained 0.4%, building on Monday's record finish. Meanwhile, the Dow slipped 76 points as investors awaited fresh market catalysts.
Trading Economics data added that investors digested stronger-than-expected October JOLTS data, with job openings rising by 372,000 to 7.74 million, while the quits rate increased to 2.1%, signalling worker confidence. Markets now see a 74% chance of a Fed rate cut on December 18, up from 62% a day earlier. In corporate news, US Steel Corporation shares fell 8% after President-elect Donald Trump pledged to block its $15 billion takeover by Nippon Steel, citing plans for tax incentives and tariffs to support the company. Tesla shares dropped 1.6% after a Delaware judge rejected Elon Musk's $56 billion pay package for a second time. The decline was further fueled by reports of falling shipments for Tesla's China-built models. AT&T rose 4.7% on cash flow forecasts, while Salesforce gained 0.4% ahead of earnings.
Click it and Unblock the Notifications
Sign in with Google