New York: South Korea’s decision to lift a surprise declaration of martial law on Tuesday provided a sense of relief to global markets, which had been grappling with uncertainty following the announcement. The martial law had caused a sharp drop in the value of the South Korean won and briefly boosted U.S. Treasuries as investors sought safer assets. With the removal of the measure, one significant geopolitical risk was alleviated, contributing to a modest uptick in U.S. stocks, which had remained relatively subdued during the trading session.
The S&P 500 and the Nasdaq closed at record highs, with the latter gaining 0.4%. Greg Bassuk, CEO of AXS Investments, noted that several factors, including political developments in France and the outcome of the U.S. presidential election, were influencing investor sentiment. “These developments, combined with those in France and the outcome of the U.S. presidential election, all are creating uncertainty as investors think about how to position themselves moving into 2025,” Bassuk stated.
The declaration of martial law by South Korean President Yoon Suk Yeol had been aimed at curbing opposition parties’ efforts to derail the parliamentary process. However, President Yoon reversed the decision after a parliamentary vote opposed the measure, and this helped restore some stability. Following the initial turmoil, the South Korean won strengthened slightly, though it remained weaker than usual against the U.S. dollar, reaching 1,418.35 per dollar.
Crude oil prices rose amid concerns over potential supply disruptions, particularly with OPEC+ planning to maintain its output cuts and geopolitical tensions simmering in the Middle East. The market also reacted to the latest Job Openings and Labor Turnover Survey (JOLTS) from the U.S. Labor Department, which showed that job openings were rising and layoffs had decreased, supporting the view that the U.S. labor market was gradually cooling.
Bassuk also pointed out the wait-and-see approach many investors are adopting, with key economic data expected to influence the U.S. Federal Reserve’s December policy decision. Investors are closely monitoring the upcoming November U.S. employment report, which will provide further insights into the direction of the U.S. economy and possible Federal Reserve actions.
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Despite a volatile day for several currencies, including a slight drop in the U.S. dollar, European stocks saw a one-month high, bolstered by the lifting of the martial law in South Korea. Political unrest in France and concerns over U.S.-China trade relations kept some uncertainty in the market. The dollar fell marginally against a basket of currencies, while the Korean won weakened slightly.
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Crude oil prices saw a notable increase, with U.S. crude rising by 2.7% to $69.94 per barrel and Brent crude climbing by 2.5% to $73.62 per barrel. In the gold market, spot gold rose by 0.13% to $2,642.25 per ounce, with investors turning to precious metals as the likelihood of a Federal Reserve rate cut increased.
