Focus moves to US Nov ISM services PMI, Fed Chair Powell

Asia market update: Asia risk-off as Geopolitics dominates markets; Weak AU GDP; Focus moves to US Nov ISM Services PMI, Fed Chair Powell.

General trend

- Despite further fresh US equity records overnight Asian equites were risk-off as Korean equities opened down 2%. However, along with the currency (KRW) prices stabilized as Korea’s parliament moved unanimously to undo the shocking and sudden imposition of martial law by Pres Yoon overnight. Yoon had accused opposition party members of being North Korean sympathizers. Opposition parties calling for Yoon to be impeached.

- Political situation in France remains unpredictable heading into today’s no confidence vote on PM Barnier’s budget.

- China rare earths index was up 1% after China banned germanium, gallium, antimony and super hard materials to the US overnight.

- Amid geopolitics, US bond yields were marginally lower before JOLTS jobs data topped expectations sending rates higher.

- Aussie dollar -1.0% to an 8-month low, with 3-yr and 10-yr yields down ~5-8bps from earlier highs after slower than expected Q3 GDP figures (weakest growth since Q4 2020 for y/y)

- China’s Nov Caixin Services PMI saw its 22nd month of expansion, although stuck in the low 50’s.

- China 10-yr yields lost -5bps to hit a fresh record lows at 1.982%. China offshore Yuan again tested the 7.30 level.

- Japan Nov Final PMI Services confirmed the move back into expansion. Charge inflation accelerated to a six-month high with business optimism strongest since July.

- New Zealand November commodity prices saw their fastest increase since February.

- US equity FUTs up slightly during the Asia session.

Looking ahead (Asian time zone)

- Wed Dec 4th (Wed night US Nov ISM Services PMI, Fed Chair Powell).

- Thu Dec 5th AU Trade Balance, KR Q3 GDP Final, BOJ Nakamura, (Thu night US Oct Trade Balance).

- Fri Dec 6th AU Home Loans, RBI Rate Decision, (Fri eve EU Q3 GDP, Fri night US Nov NFP, US Dec Michigan Consumer Sentiment).

- Sat Dec 7th CN Trade Balance.

Holidays in Asia this week

- Thu Dec 5th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens flat at 8,495.

- Australia Q3 GDP Q/Q: 0.3% V 0.5%E; Y/Y: 0.8% V 1.1%E (weakest growth y/y since Q4 2020).

- Australia Treasurer Chalmers: Describes today's GDP growth numbers as "weak" - financial press.

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

- Australia sells A$700M v A$700M indicated in 3.25% Apr 2029 bonds; Avg Yield 3.9558% v 3.8876% prior; bid-to-cover: 4.21x v 4.75x prior.

- New Zealand Nov ANZ Commodity Price M/M: 2.9% v 1.4% prior (highest since Feb 2024).

- RBNZ: Reduces weight of Yuan in trade-weighted index to 21.7% (prior: 22.6%)

- New Zealand Treasury: Weaker productivity will constrain GDP growth.

China/Hong Kong

- Hang Seng opens -0.1% at 19,722; Shanghai Composite opens -0.1% at 3,376.

- China Nov CAIXIN PMI services: 51.5 V 52.4E (22nd month of expansion).

- China sells 5-year Bonds; Avg Yield: 1.5488% v 1.6575% prior.

- China 10-yr yields hit fresh record low of 1.985% (-5bps from yesterday's levels).

- China Semiconductor Industry Association (CSIA): US chips are no longer safe and reliable [overnight update].

- US White House: US assessing new China export controls to mitigate Chinese 'coercive actions' [overnight update].

- China Commerce Ministry (Mofcom): Ban Germanium, Gallium, antimony and superhard materials exports to us "in principle"; effective Dec 3rd; to impose stricter review of graphite exports to US [overnight update].

- China said to hold Central Economic Work Conference (CEWC) on Dec 11-12th - press [**Note: last week, market speculation that China may announce more stimulus in Dec at its annual Central Economic Work as a response to Trump's tariff threat] [overnight update].

- China PBOC sets Yuan reference rate: 7.1934 v 7.1996 prior.

- China PBOC Open Market Operation (OMO): Injects CNY41B in 7-day reverse repos; Net drains CNY227B v net drains CNY248B prior.

Japan

- Nikkei 225 opens +0.3% at 39,354.

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

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For <1 Year; 1-3 Years, 3-5 Years and 10-25 Years (Inline with prior purchases).

- Japan DPP's Kazuya Shimba (opposition party): Confirms leader Tamaki to stand down for three months over alleged marital infidelity - financial press.

Korea

- Kospi opens -2.0% at 2,450.

- Former South Korea Trade Min Yeo Han-koo: Sees government 'paralysis' but private sector will continue.

- South Korea cabinet members offer to resign en masse (as expected) - Korean press.

- Bank of Korea (BOK) Monetary Policy Board emergency meeting (in response to martial law developments overnight): To increase short-term liquidity via repo ops, starting today.

- South Korea Fin Min Choi post-meeting with govt: Will communicate closely with ratings agencies and other.

- South Korea officials suspected of selling USD to support the Korean Won (KRW); cites dealers.

- South Korea ruling party may ask President Yoon to leave party and propose that the cabinet resign - South Korea media.

- South Korea opposition party planning to propose a Pres Yoon impeachment motion later today - financial press.

- (KR) South Korean Fin Min: South Korea stock market will open normally; Authorities will take all necessary measures to stabilize the markets.

- Govt to inject unlimited liquidity into financial markets as long as necessary.

- South Korea opposition party calls for Pres Yoon to step down after his effort to impose martial law - press.

- South Korean Pres Yoon to withdraw martial law decree following parliamentary vote to block it.

- South Korean Pres Yoon declares "emergency martial law" accusing opposition of North Korea sympathies and paralyzing the govt with anti-state activities [overnight update].

- South Korea Central Bank Official: Preparing ample measures to stabilize market if needed, will make messages after meetings [overnight update].

- South Korea's National Assembly Leader Woo: calls on all lawmakers to convene; Parliament will take steps in accordance with the constitution [overnight update].

Other Asia

- Thailand Nov CPI M/M: -0.1% v +0.2%e; Y/Y: 1.0% v 1.1%e (Annual pace moves back into target range).

- India Nov Final Services PMI: 58.4 v 59.2 prelim (confirms 40th month of expansion).

- Indonesia Central Bank (BI) Exec Dir Susianto: Declining demand of USD from state firms will ease FX pressures.

- Singapore Nov PMI (whole economy): 53.9 v 55.5 prior.

- Hong Kong Nov PMI (whole economy): 51.2 v 52.2 prior (2nd month of expansion).

North America

- (US) Sen Joni Ernst of iowa, Sen Bill Hagerty of Tennesee and Florida Gov Ron DeSantis among the names said to be under consideration to replace Pete Hegseth as Sec of State - US media.

- (US) Perianne Boring said to be among those considered to lead Trump Admin CFTC - US press.

- (US) House Speaker Johnson: Believes stop gap measure will fund the govt through until Mar, 2025 - financial press.

- (MX) Mexico Oct Unemployment Rate: 2.5% v 2.9%e.

- (BR) Brazil Finance Ministry: 2024 GDP growth forecast of 3.3% should be revised higher.

- Shopify Merchants Drive Record-High $11.5B in Sales (+24% y/y) over Black Friday-Cyber Monday.

- (US) Oct JOLTS job openings: 7.744M V 7.470ME.

- (US) Fed’s Daly (voter): The US economy is in a really good place.

- (US) Fed's Goolsbee (non-voter for 2024; voter for 2025): Inflation data is a noisy series; Income has been growing faster than price levels lately - Q&A.

Europe

- (EU) ECB’s Nagel (Germany): German economy faces weak outlook - FT.

- ECB's Holzmann (Austria): Trump is casting a shadow over inflation in Europe, will probably drive up inflation forecast.

- (IE) Ireland Nov PMI Services: 58.3 v 53.8 prior (44th month of expansion and fastest growth since Apr 2023).

- (FR) Politico: French PM Barnier is set to give an interview on French television later on Dec 3rd around 14:00ET (19:00 GMT), in what could be a last-ditch appeal to lawmakers to refrain from toppling the government.

- (EU) ECB’s Panetta (Italy): EU needs common debt to remain competitive.

-(EU) ECB’s Holzmann (Austria): Sees likelihood for a moderate rate cut in Dec.

Levels as of 00:20 ET

- Nikkei 225 +0.3%, ASX 200 -0.4%, Hang Seng +0.3%; Shanghai Composite +0.1%; Kospi -2.0%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.3%; Dax flat; FTSE100 -0.2%.

- EUR 1.0488-1.0514; JPY 149.53 -150.18; AUD 0.6409-0.6489; NZD 0.5831-0.5885.

- Gold +0.1% at $2,671/oz; Crude Oil +0.1% at $70.13/brl; Copper -0.2% at $4.1898/lb.