Sudden decree of martial law in South Korea weaves a confusing thread into

EU Mid-Market Update: Sudden decree of martial law in South Korea weaves a confusing thread into an already complex global political scene; Afternoon to focus on French no-confidence, US ADP and Powell.

Notes/observations

- Dust settles after South Korea Pres Yoon invoked martial law, in an unexpected move that saw KOSPI open 2% lower at market open and pare some losses to close -1.2% after Yoon withdrew the command following citizen and governmental protests. Calls for impeachment are underway. Defense Minister has already resigned

- Pricing is readjusted for Bank of England rate cuts next year following Bank of England Gov Bailey comments in pre-recorded FT interview about seeing four rate cuts in 2025. Money markets price 87bps of cuts; Sterling spiked lower as comments dropped but since bounced.

- Europe awaits French no-confidence motion for PM Barnier, expected at 10:00 ET (15:00 GMT); Analysis shows opposition parties have the required votes to oust Barnier, but Le Pen shows no signs of stopping, with suggestions she may challenge Pres Macron’s position as well.

- Taiwanese press reports that NVIDIA is working with TSMC and other supply chain partners on the next-gen Rubin platform chip (successor of Blackwell) to be available half a year ahead of schedule (originally was expected to be available in 2026).

- US schedule highlighted by ADP jobs report and Fed Chair Powell interview around 13:45ET at DealBook summit; Fed futures now price 73% chance (v 75% d/d) that FOMC cuts rates again by 25bps at Dec 18th's meeting.

- Asia closed mixed with NZX50 underperforming -1.5%. EU indices are -0.4% to +0.9%. US futures are +0.2-0.5%. Gold -0.1%, DXY +0.1%; Commodity: Brent +0.6%, WTI +0.5%; Crypto: BTC +1.6%, ETH +3.6%.

Asia

- South Korean Pres Yoon declared "emergency martial law" accusing opposition party of North Korea sympathies and paralyzing the govt with anti-state activities. Measure was later withdrawn.

- South Korea ruling party was said to ask President Yoon to leave party and propose that the cabinet resign. Saw need to remove Defense Minister.
South Korea cabinet members offer to resign en masse- BOK Dep Gov commented that there was no discussion on interest rates (**Note: comments following intra-meeting in response to martial law developments). To increase short-term liquidity via repo ops, starting immediately.

- Australia Q3 GDP Q/Q: 0.3% v 0.5%e; Y/Y: 0.8% v 1.1%e.

- Australia Nov Final PMI Services: 50.5 v 49.6 prelim (confirms 10 month of expansion).

- Japan Nov Final PMI Services: 50.5 v 50.2 prelim (confirms move back into expansion).

- China Nov Caixin PMI Services: 51.5 v 52.0 prior (22nd month of expansion).

- New Zealand Nov ANZ Commodity Price M/M: 2.9% v 1.4% prior.

Europe

- ECB's Holzmann (Austria) noted that was conceivable that the ECB will cut interest rates by 25bps in Dec but not more,

Americas

- House Speaker Johnson believed a stop gap measure would fund the govt through until Mar, 2025.

- Sen Joni Ernst of Iowa, Sen Bill Hagerty of Tennessee and Florida Gov Ron DeSantis among the names said to be under consideration to possibly replace Pete Hegseth nomination as Sec of State.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.25% at 516.84, FTSE -0.38% at 8,327.65, DAX +0.95% at 20,225.75, CAC-40 +0.34% at 7,280.44, IBEX-35 +0.54% at 11,937.44, FTSE MIB +0.97% at 34,156.00, SMI -0.24% at 11,795.69, S&P 500 Futures +0.24%].

Market Focal Points/Key Themes: European indices open generally higher and maintained the trend through the early part of the session; among sectors pulling to the upside are consumer discretionary and industrials; lagging sectors include materials and telecom; Novo Nordisk acquires Novavax’s Czech facilities; reportedly MediaForEurope looking into acquiring ProSiebensat1; focus on US durable goods orders as well as Powell speech later in the day; earnings expected in the upcoming Americas session include Hormel Foods, Foot Locker and Campbell Soup.

Equities

- Consumer discretionary: Prosieben SAT.1 Media [PSM.DE] +8.0% (MediaForEurope has asked UniCredit to arrange a loan worth €3.4B with a group of banks to finance a bid for ProSiebensat1 in 2025), Campari [CPR.IT] +4.5% (appoints new CEO).

- Energy: Vestas Wind Systems [VWS.DK] -5.5% (CFO to step down) - Financials: Pierre & Vacances [VAC.FR] +7.0% (earnings) - Healthcare: Nicox [COX.FR] +32.0% (first commercial sale of ZERVIATE) - Industrials: Stellantis [STLA.NL] +0.5% (traders circulating unverified Italian press chatter that Stellantis Chairman picks outgoing Apple CFO Maestri as new CEO of Stellantis), Maersk [MAERSKB.DK] -3.5% (Morgan Stanley cuts to underweight), Systemair [SYSR.SE] +11.5% (Q2 results) - Technology: ASML Holding [ASML.NL] +1.0% (NVIDIA said to be working with TSMC and other supply chain partners on the next-gen Rubin platform chip (successor of Blackwell) to be available half a year ahead of schedule), ASM International [ASM.NL] +1.5% (affirms Q4 and FY25 guidance following new US curbs on China).

Speakers

- BOE Gov Bailey stated that saw four rate cuts next year in the UK if BOE's outlook for domestic economy beared out; Central view implied that the BoE would have to lean in a bit harder to keep inflation on the right trajectory. Saw a lot of fiscal tightening in UK budget.

- ECB’s Rehn (Finland) reiterated view that saw reasons to cut rates in Dec. Believed policy easing would continue in the coming months as inflation neared target while growth remained fragile.

- French Pres Macron said to have dismissed calls for him to resign coming from across the political spectrum; But it was precisely that Le Pen likely wanted.

- Czech Central Bank (CNB) Gov Michl stated that would very likely soon pause process of rate cuts.

- European Union reportedly to crack down on Asian online retailers; Measures under consideration include a new tax on ecommerce platforms’.

- OECD updated its economic outlook which.

- BOK Gov Rhee commented that more rate cuts were unlikely to result from recent political turmoil; Coordination with govt was working well.

- South Korea Defense Min resigned (as speculated).

Currencies/fixed income

- USD was firmer as focus remained on the geopolitical situation. Greenback benefiting from safe-haven flows. Focus also on an upcoming speech from Fed Chair Powell later today and ADP employment data.

- EUR/USD hovering around the 1.05 level as focus was on the looming French confidence vote that could topple the French govt. Situation occurred after PM Barnier forced through his controversial budget without a parliamentary vote. The French-German 10-year bond spread at 85bps. The spread would need to return back below the 80 level to dissipate current pessimism. ECB members continued to steer expectations for a 25bps rate cut at the upcoming Council meeting next week.

- GBP/USD fell after BOE Gov Bailey noted that he foresaw 4 rate cuts in 2025.

- USD/JPY rose to test 150.60 in the session.

- Political turmoil in South Korea saw the USD/KRW surged to its highest level in two years above 1,440.

Economic data

- (RU) Russia Nov Services PMI: 53.2 v 51.6 prior (5th month of expansion); Composite PMI: 52.6 v 50.9 prior.

- (NO) Norway Q3 Current Account (NOK): 225.5B v 232.3B prior.

- (ZA) South Africa Nov PMI (whole economy): 50.9 v 50.6 prior (4th month of expansion).

- (SE) Sweden Nov PMI Services: # v 53.2e; PMI Composite: 51.7 v 53.1 prior.

- (CZ) Czech Q3 Average Real Monthly Wage Y/Y: 4.6% v 4.3%e; Average Nominal Monthly Wage Y/Y: 7.0% v 6.5% prior.

- (ZA) South Africa Q4 BER Consumer Confidence: -6 v -5 prior.

- (ES) Spain Nov Services PMI: 53.1 v 53.3e (15th month of expansion); Composite PMI: 53.2 v 53.8e.

- (IT) Italy Nov Services PMI: 49.2 v 50.8e (1st contraction in 11 months) ; Composite PMI: # v 49.6e.

- (FR) France Nov Final Services PMI: 46.9 v 45.7 prelim (confirmed 3rd month of contraction); Composite PMI: 45.9 v 44.8 prelim.

- (DE) Germany Nov Final Services PMI: 49.3 v 49.4 prelim (confirmed 1st contraction in 9 months); Composite PMI: 47.2 v 47.3 prelim.

- (EU) Euro Zone Nov Final Services PMI: 49.5 v 49.2 prelim (confirmed 1st contraction in 10 months); Composite PMI: 48.3 v 48.1 prelim.

- (UK) Nov Final Services PMI: 50.8 v 50.0 prelim confirmed 13th month of expansion but lowest since Oct 2023); Composite PMI: 49.9 v 49.9 prelim.

- (UK) Nov Official Reserves Changes: -$1.0B v -$1.0B prior.

- (EU) Euro Zone Oct PPI M/M: 0.4% v 0.4%e; Y/Y: -3.2% v -3.2%e.

- (NO) Norway Nov House Price Index M/M: -0.5% v -0.7% prior; Y/Y: 5.2% v 4.9% prior.

Fixed income issuance

- (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

- (DK) Denmark sold total DKK 3.18B in 2033 and 2052 DGB bonds.

- (SE) Sweden sold total SEK4.0B vs. SEK4.0B indicated in 2032 and 2035 Bonds.

- (NO) Norway sold total NOK2.0B vs. NOK2.0B indicated in 2027 and 2039 Bonds.

- (UK) DMO sold £4.0B in 4.0% Oct 2031 Gilts; Avg Yield: 4.155% v 3.988% prior; bid-to-cover: 2.91x v 3.42x prior; Tail: 0.8bps v 0.2bps prior.

- (GR) Greece Debt Agency (PDMA) sold €600M vs. €500M indicated in 12-month bills; Avg Yield: 2.27% v 2.82% prior; Bid to cover: 1.59x v 1.83x prior.

Looking ahead

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to leave Base Rate unchanged at 5.75% (no set time).

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell €3.5B in 2.60% Aug 2034 Bunds.

- 06:00 (EU) EU Commission to sell combined €3.5B in 3-month and 6-month Bills.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 06:00 (IE) Ireland Nov Unemployment Rate: No est v 4.2% prior.

- 06:01 (NZ) New Zealand Nov CoreLogic Home Prices M/M: No est v -0.5% prior.

- 06:30 (TR) Turkey Nov Real Effective Exchange Rate (REER): No est v 64.82 prior.

- 07:00 (US) MBA Mortgage Applications w/e Nov 29th: No est v 6.3% prior.

- 07:00 (BR) Brazil Oct Industrial Production M/M: 0.2%e v 1.1% prior; Y/Y: 6.3%e v 3.4% prior.

- 07:00 (MX) Mexico Oct Leading Indicators M/M: No est v -0.12 prior.

- 07:00 (MX) Mexico Nov Vehicle Domestic Sales: No est v 122.1K prior.

- 07:00 (UK) Weekly PM Question time in House.

- 08:00 (BR) Brazil Nov Services PMI: No est v 56.2 prior; Composite PMI: No est v 55.9 prior.

- 08:00 (HU) Hungary Central Bank (MNB) Nov Minutes.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (US) Nov ADP Employment Change: +158Ke v +233K prior.

- 08:30 (CA) Canada Q3 Labor Productivity Q/Q: -0.3%e v -0.2% prior.

- 08:30 (EU) ECB chief Lagarde in EU Parliament.

- 08:45 (US) Fed’s Musalem.

- (PL) Poland Central Bank (NBP) Interest Rate Decision.

- 09:30 (CA) Canada Nov Services PMI: No est v 50.4 prior; Composite PMI: No est v 50.7 prior.

- 09:45 (US) Nov Final S&P Services PMI: 57.0e v 57.0 prelim; Composite PMI: 55.3e v 55.3 prelim.

- 09:45 (PL) Poland Central Bank (NBP) Post Rate Decision Policy Statement.

- 10:00 (US) Oct Factory Orders: +0.2%e v -0.5% prior; Factory Orders (ex-transportation): No est v 0.1% prior.

- 10:00 (US) Oct Final Durable Goods Orders: 0.2%e v 0.2% prelim; Durables (ex-transportation): 0.1%e v 0.1% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v -0.2% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.2% prelim.

- 10:00 (US) Nov ISM Services Index: 55.6e v 56.0 prior; Prices Paid: 56.4e v 58.1 prior.

- 10:00 (CO) Colombia Oct Exports: $4.2Be v $4.13B prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 12:10 (DE) ECB’s Nagel (Germany).

- 13:45 (US) Fed chief Powell at NYTimes dealbook summit.

-14:00 (US) Federal Reserve Beige Book.

- 16:45 (NZ) New Zealand Q3 Volume of All Buildings Q/Q: -0.5%e v -0.2% prior.

- 18:00 (KR) South Korea Q3 Preliminary GDP (2nd of 3 readings) Q/Q: 0.1%e v 0.1% advance; Y/Y: 1.5%e v 1.5% advance.

- 19:30 (AU) Australia Oct Trade Balance (A$) 4.5Be v 4.6B prior; Exports M/M: No est v -4.3% prior; Imports M/M: No est v -3.1% prior.

- 19:30 (AU) Australia Oct Household Spending M/M: +0.3%e v -0.1% prior; Y/Y: 2.2%e v 1.3% prior.

- 20:00 (PH) Philippines Nov CPI M/M: 0.3%e v 0.2% prior; Y/Y: 2.5%e v 2.3% prior.

- 20:30 (JP) BOJ’s Nakamura.

- 22:35 (JP) Japan to sell 30-year JGB Bonds.