Domestic Stock Market Decline Continues...Focus on US-China Talks Impact

[Asia Economy Reporter Park Jihwan] On the morning of the 19th, the domestic stock market is showing a decline of over 1%. It appears that the drop in the U.S. New York stock market overnight, caused by a sharp rise in the 10-year Treasury bond yield, negatively affected investor sentiment. The market also pointed out that the first high-level U.S.-China talks under the Biden administration should be noted as a significant variable.

As of 10:16 a.m. on the day, the KOSPI recorded 3,031.53, down 34.48 points (1.12%) from the previous trading day. The index opened at 3,063.01, down 3.00 points (0.10%) from the previous session, and continues to show a weak trend around the 3,020 level.

The decline in the domestic stock market on this day is interpreted as a result of the overnight drop in major U.S. indices due to the sharp rise in the 10-year Treasury bond yield. The Dow Jones Industrial Average fell 0.46%, the Standard & Poor's (S&P) 500 index dropped 1.48%, and the tech-heavy Nasdaq index plunged 3.02%. The U.S. 10-year Treasury yield surpassed the 1.7% level. Despite the Federal Reserve's (Fed) stance to maintain an accommodative policy, market concerns that economic recovery and inflation rebound will accelerate pushed yields higher again.

In the KOSPI, individual investors are net buyers with 708.5 billion KRW. Conversely, foreigners and institutions are net sellers with 184.7 billion KRW and 506.8 billion KRW, respectively.

Among the top 10 market capitalization stocks, all are in decline. SK Hynix recorded the largest drop, falling 2.82% to 138,000 KRW compared to the previous day. LG Chem (-2.79%), Samsung SDI (-1.96%), Kakao (-1.81%), and Celltrion (-1.54%) also fell by 1-2%.

At the same time, the KOSDAQ is also in a downtrend. The KOSDAQ index stood at 945.13, down 0.49% (4.70 points) from the previous day. The index opened at 946.61, down 3.22 points (0.34%) from the previous session, continuing its weak trend. Individuals and foreigners are net buyers with 49.5 billion KRW and 15.1 billion KRW, respectively, while institutions are net sellers with 62.1 billion KRW.

Opinions were divided on the impact of the first high-level U.S.-China talks held during the trading session on the domestic stock market. Seo Sangyoung, a researcher at Kiwoom Securities, explained, "Since the U.S. participants are hardliners toward China, they are expected to make tough remarks on most of the meeting agenda. If friction between the U.S. and China intensifies, volatility will increase not only in the stock market but also in the foreign exchange, bond, and commodity markets, negatively affecting foreign investor flows."

Lee Jinwoo, head of investment strategy at Meritz Securities, forecasted, "During the Trump administration, the tariff issue was highlighted, and the domestic stock market, which is sensitive to global trade volume issues, was significantly affected. However, this time, political issues such as Hong Kong and Taiwan are taking precedence over trade, so unexpected sudden variables affecting the stock market are unlikely to emerge."

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