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Global Stock Markets Plunge Ahead of US Jobs Data; South Korea’s Won Under Pressure

Global stock markets decline with investors awaiting US jobs data. South Korea's won weakens amid political tensions, adding to market concerns.

Global Stock Markets Decline Before US Jobs Data

Global stock markets experienced a downturn on Friday as caution dominated investor sentiment ahead of critical US jobs data. The report, a key indicator of economic health, could heavily influence the Federal Reserve's policy trajectory.

A benchmark regional equities gauge dropped by 0.2%. Markets in Japan, South Korea, and Australia posted losses, while modest gains were recorded in Hong Kong and mainland China. These movements mirrored declines on Wall Street, where the S&P 500 and Nasdaq 100 fell by 0.2% and 0.3%, respectively, after a five-day rally.

South Korea’s Markets and the Won Face Political Uncertainty

South Korea took center stage in Asian trading as the won weakened significantly due to rising political tensions. Local media reported that opposition lawmakers were on standby amid speculation about a potential declaration of martial law. The uncertainty hit the nation’s benchmark stock index, which slipped 0.3%.

To counteract market volatility, South Korea announced measures to improve after-hours liquidity in its currency trading. These steps aim to stabilize the won, which has been under pressure throughout the week.

Meanwhile, Treasuries saw little movement in Asian markets. Yields on 10-year and 30-year bonds edged lower, reflecting cautious optimism. Market participants are now pricing in a 70% probability of a quarter-point rate cut by the Federal Reserve in December.

US Jobs Data Holds Key to Global Stock Market Trends

Investors across global stock markets are eyeing the US nonfarm payrolls report, which economists estimate will show a 220,000 job increase in November. This rebound follows disruptions in October due to hurricanes and a major labor strike.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, highlighted the influence of US semiconductor stocks on Asian markets. “Weakness in US chipmakers has dampened sentiment, with Japanese semiconductor stocks facing similar selling pressure,” he noted.

Broader Market and Political Developments Impact Global Sentiment

In Europe, bond risk measures in France fell as lawmakers inched closer to a budget deal. French President Emmanuel Macron emphasized his commitment to completing his presidential term, aiming to quell political instability.

Elsewhere, OPEC+ extended its production cuts by three months, leaving oil prices slightly lower. Meanwhile, Chevron Corporation announced plans to slow production growth in the Permian Basin, the largest US oil field. Gold prices held steady after recent declines.

In cryptocurrency markets, Bitcoin retreated from its all-time high of over $100,000. Traders are bracing for additional volatility, especially after former US President Donald Trump appointed David Sacks as a White House czar for cryptocurrency and artificial intelligence.

Outlook for Global Stock Markets

The US jobs data is anticipated to provide significant clarity on the labor market’s resilience, especially in the context of Federal Reserve rate cuts. Analysts at TD Securities suggested that a stronger payroll figure might lead to initial volatility in bond markets, but the reaction could stabilize as investors analyze the details.

A recent survey by 22V Research revealed mixed market expectations:

• 45% believe the jobs data will have negligible impact.

• 32% anticipate risk-off sentiment.

• 23% expect risk-on moves.

Matthew Weller, global head of market research at Forex.com, noted, “While the report might sway sentiment, the Federal Reserve’s policy direction is unlikely to shift drastically. The focus remains on the timing of the next rate cut.”

Key Data to Watch in Asia

In addition to the US jobs report, Asian markets are awaiting key economic releases. India’s central bank is set to announce its latest interest rate decision, while Malaysia and China are expected to publish foreign reserves data for November. These updates will add further nuance to the global stock markets outlook.