[Good Morning Stock Market] US-Iran Conflict Also Negative for Domestic Stock Market

On the 7th, a funeral for Qasem Soleimani, former commander of the Quds Force of the Iranian Revolutionary Guard Corps, was held in Kerman, southeastern Iran, where mourners gathered. (Photo by EPA Yonhap News)

[Asia Economy Reporter Kum Boryeong] As concerns over a military clash between the United States and Iran have increased, US and European stock markets showed weakness on the 7th (local time). Analysts suggest this will act as a negative factor for the Korean stock market on the 8th. Additionally, the rise in oil prices due to the US-Iran conflict has emerged as a variable.

◆ Sangyoung Seo, Kiwoom Securities Researcher = The US stock market declined as geopolitical risks surrounding Iran continued to weigh heavily. This is expected to burden the Korean stock market. The reason global stock markets showed strength the previous day is presumed to be the highlighted low possibility of a full-scale war between Iran and the US. However, as the US deployed B-52 bombers around Iran and dispatched amphibious assault units, raising concerns of military conflict, European and US stock markets weakened. This is judged to be a negative factor for the Korean stock market today.

Samsung Electronics' earnings will be announced today. Despite poor performance last year amid a downturn in the industry, Samsung Electronics' stock surged by 44%. Considering this, the possibility of selling pressure after the earnings announcement cannot be ruled out. However, changes in related stocks due to the rise in the US semiconductor index are expected to determine the direction of the index. In particular, attention should be paid to foreign investors' movements in related stock groups after Samsung Electronics' earnings announcement.

◆ Dongho Lee, Leading Investment Securities Researcher = The biggest risk going forward is the rise in oil prices caused by the US-Iran conflict. This is inflationary pressure not driven by demand (economic activity), and it affects interest rates. It was a variable that was not significantly considered in the initial stock market outlook. If a gradual economic recovery is expected, demand-side inflationary pressure could be stable. Most market participants have anticipated this. However, the rise in oil prices due to the US-Iran conflict is a newly emerging inflationary pressure that is not controlled by economic fundamentals, making it a risk variable. Of course, due to previous economic sanctions, Iran's economic strength has significantly weakened, so the probability of a full-scale or prolonged war between the two countries seems low. Western powers other than the US are also not pro-Iran. Therefore, there is little need to worry about a long-term rise in oil prices.

What is concerning, however, is if oil prices continue to rise further amid ongoing tensions between the two countries and then show downward rigidity. The fact that global economic indicators are gradually recovering this year and international oil prices may rise to some extent has already been reflected in the market. However, if oil prices rise beyond that level, inflationary pressure will be higher than initially expected. In such a situation, economic indicators may recover slowly while inflationary pressure (especially cost-side rather than demand-side) is higher than expected, potentially causing concerns about interest rate burdens beyond what the economy can bear.

This content was produced with the assistance of AI translation services.