Asian stocks fall due to South Korea risks, dollar cautious ahead of payrolls

SYDNEY – Asian shares fell on Friday as political turmoil in South Korea dragged on, while dollar bulls waited anxiously to see whether U.S. payrolls defied expectations of a rate cut this month or scuttled them. Consolidated.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3%, partly driven by a 1.7% decline in South Korea’s KOSPI. The Korean won fell 0.8% to 1,425.42 per dollar on Tuesday, after hitting a low of 1,443.4 on Tuesday after President Yoon Suk Yeol declared martial law in the country.

South Korea’s main opposition Democratic Party said lawmakers are ready to declare another martial law after receiving multiple reports, Yonhap news agency reported Friday.

Elsewhere, China’s blue chips rose 0.2% and Hong Kong’s Hang Seng rose 0.4%.

Japan’s Nikkei fell 0.6% but is up 2.5% for the week. Japan’s local wages rose at the fastest pace in 32 years in October, data showed, although markets are still expecting no rate hike from the Bank of Japan this month.

All eyes are on the US Non-Farm Payrolls report due today.

Forecasts are focused on an increase of 200,000 jobs in November, a rebound from a modest gain of 12,000 in October when the results were affected by hurricanes and strikes. The unemployment rate is expected to rise from 4.1% to 4.2%.

With the potential for a Goldilocks outcome in the markets, risks abound as a too-strong report could jeopardize the prospects for a rate cut while a surprisingly soft number would raise concerns about the economy.

Futures show a 70% chance of a rate cut by the Federal Reserve on December 18, which suggests the market is sensitive to a hot jobs report, especially an additional quarterly point in the last week or so. The price of futures has gone up due to the cut. 2025.

Chris Weston, head of research at Pepperstone, said: “With the U/E rate falling below 100k at 4.2%, and certainly at 4.3%, we could see pressure on equities, even if it is all in the 25bp rate. Assures reduction.” ,

“Some may see a risk that an NFP print above 250k with a U/E rate at 4.1% or lower could put the market at risk as it increases the likelihood that the Fed will stop easing on December 18. ”

Overnight, Wall Street retreated from record highs as investors adjusted their positions ahead of the payroll report. Still, the tech-heavy Nasdaq has gained 2.5% so far this week, adding $1 trillion to its market capitalization.

The powerful US dollar fell 0.6% against its rivals overnight and hit a three-week low of 105.84 on Friday. Bulls are wary of a sharp decline as the market has been bullish on the greenback for a long time.

The euro rose 0.7% overnight and was steady at $1.0580, after French Prime Minister Michel Barnier resigned in a widely expected development in the country’s political saga.

Bitcoin, which touched the $100,000 mark for the first time as investors bet on favorable US regulatory changes, turned into profit-taking. It fell as low as $92,092 on Friday before settling at $98,265, up 1% for the day.

“This increase in volatility over the past 24 hours has the hallmarks of a classic blow-off top,” said IG analyst Tony Sycamore.

“While we do not see this as the end of the Bitcoin bull run, it does signal that we are entering a consolidation phase in the coming days/weeks.”

Trump said late Thursday that he is appointing PayPal’s former chief operating officer David Sachs to be his White House artificial intelligence and crypto czar.

In the bond market, Treasuries were flat on Friday. Two-year yields remained at 4.15%, up 2 basis points overnight, while 10-year benchmark Treasury yields were steady at 4.178% and little changed for the week.

Oil prices continued to fall on Friday despite OPEC’s decision to delay a planned production increase until April. US West Texas Intermediate slipped 0.2% to $68.18 a barrel, having fallen 0.4% overnight. [O/R]

Gold remained in a narrow range and was down 0.4% at $ 2621.89 an ounce. It is down 1.2% this week.

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