[Good Morning Market] Economic Anxiety Over Geopolitical Uncertainty

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Junho] On the 14th, South Korea's stock market is expected to be influenced simultaneously by geopolitical uncertainties between Russia and Ukraine and concerns about the U.S. economy.

Last Friday (the 11th, local time), the New York stock market was dominated by the possibility of armed conflict between Russia and Ukraine. On that day, the Dow Jones Industrial Average closed at 34,738.06, down 503.53 points (1.43%) from the previous day. The S&P 500 index fell 85.44 points (1.90%) to 4,418.64, and the Nasdaq index closed at 13,791.15, down 394.49 points (2.78%).

Seosangyoung, a researcher at Mirae Asset Securities, analyzed, "Last Friday's market fell as reports of Russia's plan to invade Ukraine triggered a wave of selling. The war with no winners and sanctions by various countries caused commodity prices to surge, increasing inflationary threats, and selling centered on technology stocks emerged."

Subsequently, on the 12th, a phone call took place between U.S. President Joe Biden and Russian President Vladimir Putin, but both sides failed to narrow their differences. However, it is interpreted that neither country desires a full-scale war, suggesting a high likelihood of prolonged geopolitical tension.

While such geopolitical risks may impact the stock market, attention should also be paid to the U.S. consumer sentiment index released on the same day. At a time when various concerns about the possibility of war were emerging, the University of Michigan's February consumer sentiment index recorded 61.7. This was significantly below the January final figure (67.2) and market expectations (67.0), marking the lowest level since October 2011.

As the Federal Reserve, which sets U.S. monetary policy, is prominently signaling a hawkish stance including a rate hike next month, weak economic indicators and expanding economic anxiety could act as factors amplifying volatility in global financial markets, including South Korea.

Lee Kyungmin, a researcher at Daishin Securities, said, "We need to raise our alertness to the increased volatility in financial markets this week. Another divergence and widening gap between the economy and monetary policy are expected. Economic indicators are weaker than expected, and the January Federal Open Market Committee (FOMC) minutes are likely to be interpreted hawkishly."

On the 16th, U.S. retail sales and industrial production data will be released. The following day, the U.S. FOMC meeting minutes are scheduled to be disclosed.

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