Asian Markets React to Political Unrest and Economic Data

Most Asian equities fell on Monday, with South Korean shares hitting a year-low due to growing political unrest. Investors were cautious while assessing key economic data from China and Japan.

S.Korean Shares Slide 2%, Lead Asia Shares Lower

South Korea’s KOSPI dropped over 2%, reaching its lowest since November 2023. The index lost more than 1% last week amid a deepening political crisis. President Yoon Suk Yeol is under investigation for attempting to impose martial law. Despite surviving an impeachment vote, political instability is causing jitters among investors across Asia.

The Philippine PSEi Composite index fell 0.7%, while Indonesia’s market remained largely unchanged. Australia’s S&P/ASX 200 inched down 0.2%, and Indian markets indicated a muted start.

Japan GDP, China CPI in Focus Spur Muted Reaction from Stocks

Japan’s Nikkei 225 rose 0.3%, and the TOPIX was up 0.4% after the GDP data showed growth slightly exceeding expectations but below prior quarters. This raised doubts about the Bank of Japan’s capability to hike interest rates.

China’s Shanghai Composite index saw a 0.4% rise, but consumer inflation worsened in November amid continuing deflationary trends. Producer price inflation remained subdued, reflecting challenges in domestic demand and a sluggish property sector. Investors are keenly awaiting clues from China's Central Economic Work Conference for potential stimulus.

Hong Kong's Hang Seng index gained 0.1%.

Global attention turns to the upcoming U.S. consumer price index data, expected Wednesday, to inform the Federal Reserve’s interest rate strategy. Stronger-than-expected nonfarm payroll growth wasn’t enough to shift expectations for rate cuts.