Breakfast Bites - Political Turmoil Persists

Rise and shine everyone.

US equities reached fresh record highs overnight, but Asian markets turned risk-off, led by a sharp 2% drop in Korean equities at the open. The selloff followed South Korean President Yoon’s unexpected declaration of martial law, citing accusations that opposition members were North Korean sympathizers. Markets stabilized as the Korean parliament unanimously moved to reverse the decision, and President Yoon withdrew the order following widespread protests. By the close, the KOSPI had pared losses to end down 1.2%, but calls for Yoon’s impeachment are gaining traction, with the Defense Minister already resigning.

France’s political turmoil continues to dominate headlines, with a no-confidence vote on PM Barnier’s budget set for later today. Analysis suggests opposition parties have the necessary votes to oust Barnier, which could escalate tensions further. Le Pen has made it clear she intends to maintain pressure on President Macron, with speculation mounting over her plans to challenge his leadership directly.

In China, the rare earths index rose 1% after the government imposed export bans on germanium, gallium, antimony, and superhard materials critical to semiconductors and EV batteries. Meanwhile, China’s November Caixin Services PMI extended its expansion streak to 22 months, though growth remained subdued in the low 50s. China’s 10-year government bond yield dropped another 5bps to a record low of 1.982%, while the offshore yuan hovered near the 7.30 level.

Australia’s economy showed signs of strain, with Q3 GDP figures missing expectations and growth slowing to its weakest pace since Q4 2020. The Australian dollar fell 1% to an eight-month low, while 3-year and 10-year bond yields dropped 5-8bps. In Japan, the November final PMI for services confirmed a return to expansion, with charge inflation hitting a six-month high and business optimism at its strongest since July. New Zealand commodity prices for November posted their fastest increase since February, offering a rare bright spot in the region.

In Europe, Bank of England Governor Bailey hinted at four rate cuts in 2025 during a pre-recorded interview with the FT, leading markets to price in 87bps of cuts. Sterling initially fell but later recovered. Attention remains focused on the French no-confidence motion, where political analysts believe PM Barnier is likely to lose. Le Pen, however, shows no signs of relenting and could escalate her campaign against Macron’s presidency.

US bond yields were marginally lower overnight but moved higher after stronger-than-expected JOLTS data reinforced the labor market’s resilience.

In corporate news, Taiwanese reports suggest NVIDIA is fast-tracking the development of its next-generation Rubin platform chip, expected to launch six months earlier than planned, targeting availability before 2026.

Eli Lilly’s Zepbound outperformed Novo Nordisk’s Wegovy in a trial, with users losing 20% vs. 14% of body weight over 72 weeks. Both drugs had similar gastrointestinal side effects. The results boost Lilly’s position in the $130 billion obesity drug market as Novo develops its next-generation compound, CagriSema.

Today’s calendar includes the ADP jobs report and Fed Chair Powell’s interview at the DealBook Summit at 1:45pm ET.

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