[Good Morning Stock Market] Global Markets Bounce Back Successfully... Will Domestic Market Rise?

[Image source=Yonhap News]

[Asia Economy Reporter Ji-hwan Park] The global stock markets rose, supported by major central banks' stimulus measures such as the expansion of currency swaps.

On the 19th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 20,087.19, up 188.27 points (0.95%) from the previous session. The Standard & Poor's (S&P) 500 index rose 11.29 points (0.47%) to 2,409.39, and the Nasdaq closed at 7,150.58, up 160.73 points (2.3%).

Europe also saw market gains due to liquidity supply measures by various governments. The FTSE 100 index of the London Stock Exchange closed at 5,173.51, up 1.83% from the previous trading day. Germany's Frankfurt Stock Exchange DAX index and France's Paris Stock Exchange CAC 40 index rose 2.00% and 2.68%, closing at 8,610.43 and 3,855.50, respectively. The Euro Stoxx 50 index also recorded a 2.86% increase to 2,454.08.

Attention is focused on whether the domestic stock market, which experienced an unprecedented plunge the previous day, will escape the panic situation. The KOSPI and KOSDAQ indices fell sharply by 8.39% and 11.59%, respectively, creating a shock crash.

◆Dae-hoon Han, SK Securities Researcher= A currency swap agreement worth 60 billion dollars was signed between the Bank of Korea and the U.S. Federal Reserve (Fed). This is the second currency swap between the two countries since 2008. At that time, due to the global financial crisis, concerns about dollar liquidity in the domestic foreign exchange market intensified, and the currency swap contributed to stabilizing the foreign exchange market in the short term. Of course, it is difficult to say that the stock and foreign exchange markets will stabilize solely by the currency swap agreement. Ultimately, policies that can address the root cause of the crisis must accompany it. If the U.S. dollars procured through this currency swap are supplied immediately, it is expected to have a stabilizing effect on the foreign exchange market, which had shown instability due to dollar supply-demand imbalances. Although this Korea-U.S. currency swap alone cannot change the flow of the stock market, it is positive in that a safety net has been secured.

◆Kyung-min Lee, Daishin Securities Researcher= Currently, a panic market is unfolding with simultaneous capital outflows from both global safe assets and risk assets. As a result, dollar demand has surged, pushing the dollar index above 103 points. In this situation, securing a pipeline to receive dollars from the U.S., the key currency country, is significant. It is expected to open up breathing room for actual dollar supply as well as serve as a psychological safety net. The U.S. currency swap agreement was previously made in October 2008 (30 billion dollars). At that time, it was a short-term bottom and technical rebound trigger for the KOSPI market, which was also suffering from a panic market. The won/dollar exchange rate, which was in the 1,200 won range in early October 2008, soared to 1,492 won (October 28), and the KOSPI fell below the 900 level (October 27). Through this Korea-U.S. currency swap, it is expected that the foreign exchange market, which surged on the 19th, as well as the panic market that has been unfolding day after day, will have its instability partially controlled. The first condition for strengthening stability in the Korean financial market, including the KOSPI, has been established.

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