[Good Morning Stock Market] Economic Indicators Fall Short of Expectations... Short-Term Optimism Weakens

Dow Jones, S&P 500, and Nasdaq All Close Lower
US May Consumer Confidence Index Below Market Expectations
Short-Term Decline Expected in Chinese Commodity Prices... Decline Limited by Global Economy

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The U.S. May Consumer Confidence Index fell short of expectations, causing the stock market to stall. The dollar weakened as Treasury yields declined.

The New York stock market closed lower on the 25th (local time). On the New York Stock Exchange that day, the Dow Jones Industrial Average closed at 34,312.46, down 0.24% (81.52 points) from the previous trading day. The S&P 500 and the tech-heavy Nasdaq indices closed at 4,188.13 and 13,657.17, down 0.21% (8.92 points) and 0.03% (4.00 points), respectively.

◆ Seo Sang-young, Researcher at Mirae Asset Securities = The U.S. stock market showed a cautious stance, and risk asset preference weakened due to economic indicators. The U.S. May Consumer Confidence Index was announced at 117.2, below last month's 117.5 and the expected 119.5. The Present Situation Index rose from 131.9 to 144.3, but the Expectations Index declined from 121.7 to 117.5, indicating a weakening of the short-term optimism that had recently improved.

The job gap, which is the difference between the percentage of people who say jobs are plentiful and those who say jobs are hard to get, rose sharply to 34.6 percentage points from 21.6 percentage points last month. This suggests an improvement in the labor market.

New home sales fell short of expectations, but the median sales price rose to $372,400 from $334,200 (approximately 375.3 million KRW) last month. The Case-Shiller Home Price Index surged 13.3% year-over-year, marking the highest increase since December 2005. Overall, inflationary pressures have increased due to employment stability and rising home prices. However, Treasury yields fell due to weakened risk asset preference and Treasury auctions.

◆ Kim Yumi, Researcher at Kiwoom Securities = U.S. Treasury yields declined as the May Consumer Confidence Index fell short of market expectations and Federal Reserve (Fed) officials made remarks controlling policy expectations. The improvement in the May sentiment indicators was limited, weakening risk asset preference. Some Fed officials expressed hawkish views. However, most emphasized the continuation of accommodative policies, causing the 10-year U.S. Treasury yield to fall to around 1.56%. The dollar weakened in line with U.S. Treasury yields.

Domestic government bond yields showed weakness mainly in short-term bonds amid caution from the Monetary Policy Committee. However, foreign investors recorded net purchases of more than 10,000 contracts in 3-year Treasury futures. The 20-year Treasury bond auction held that day proceeded smoothly, limiting its impact on the market.

◆ Cho Cheol-kyun, Researcher at NH Investment & Securities = Major raw material prices in China are expected to stabilize downward in the short term. Since the Chinese government mentioned stabilizing raw material prices on the 12th, prices of fuel coal, hot-rolled steel, and iron ore futures in China have plunged 20.9%, 20.1%, and 19.5%, respectively, from their May peaks. Additionally, as southern China enters the rainy season, raw material prices in China are expected to decline in the short term due to the seasonal off-season and strong government intervention.

The decline in steel prices originating from China negatively affects the international steel price uptrend. In the short term, there is a high possibility of steel price weakness or a period of adjustment during the summer off-season. However, the recent steel market improvement is due not only to China but also to economic improvements in the U.S., Europe, and other overseas markets, so the decline is expected to be limited. A price rebound is anticipated as the economic recovery continues in the second half of the year amid an inflationary environment.

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