[Good Morning Stock Market] US Stocks Fall Due to Rising Oil Prices and Aggressive Monetary Policy... "KOSPI Expected to Start Lower"

[Image source=AP Yonhap News]

[Asia Economy Reporter Myung-hwan Lee] On the 23rd (local time), the U.S. stock market closed lower due to the impact of rising international oil prices and aggressive remarks from Federal Reserve (Fed) officials.

On that day, the U.S. stock market started lower as profit-taking emerged following recent gains. Additionally, the sharp rise in international oil prices heightened inflation concerns, dampening risk asset appetite. Continued hawkish comments from Fed officials also contributed to the overall decline in investor sentiment. The tech-heavy Nasdaq index fell 1.32%, while the Dow Jones Industrial Average and the Standard & Poor's (S&P) 500 index dropped 1.32% and 1.23%, respectively. On the 24th, the Korean stock market is expected to start lower due to concerns over economic slowdown and foreign investor supply-demand pressures.

Sang-young Seo, Researcher at Mirae Asset Securities: "U.S. stock market ↓ due to economic contraction concerns... KOSPI expected to start lower"

On the 24th, the Korean stock market is expected to start down about 0.7%. The recent decline in the U.S. stock market, driven by increased profit-taking after recent gains, poses a burden on the Korean market. Rising concerns over economic slowdown and expectations of a rapid pace of Fed tightening also add pressure. This could lead to burdens on foreign investor supply-demand.

On the 23rd (local time), the U.S. stock market started lower due to profit-taking following recent gains. The sharp rise in international oil prices heightened inflation concerns, dampening risk asset appetite. However, a rebound buying wave centered on tech stocks briefly pushed the Nasdaq into positive territory, but ongoing global economic slowdown concerns led to renewed selling pressure.

International oil prices surged significantly that day, apparently due to a decrease in U.S. crude oil inventories and news of the Caspian pipeline transport suspension. This could negatively impact the global economy, highlighting fears of economic contraction. Aggressive remarks from Fed officials also continued. Loretta Mester, President of the Cleveland Federal Reserve Bank, mentioned the need for several 50 basis point rate hikes this year along with simultaneous quantitative tightening, referring to aggressive monetary policy. This acted as a factor dampening overall investor sentiment and stimulated profit-taking desires.

Jung-hoon Seo, Researcher at Samsung Securities: "Sustained rise in commodity prices... Attention needed on materials and energy sectors"

On the 23rd (local time), the New York stock market declined due to the surge in oil prices. News that the Black Sea oil pipeline in Russia was damaged, potentially reducing supply for several months, fueled the oil price increase. The Russian government's request to pay for crude oil imports in rubles instead of dollars added further uncertainty. On that day, West Texas Intermediate (WTI) crude oil closed at $114.9, up 5.2% from the previous trading day.

By sector, the energy sector rose 1.74%, recording the highest increase. Utilities showed relative strength, while financials and healthcare underperformed.

U.S. President Joe Biden embarked on a European tour to address the Ukraine issue. Additional sanctions against Russia are expected to be discussed during the tour. Jake Sullivan, White House National Security Advisor, mentioned that new sanctions would be announced following meetings with European leaders.

The rise in commodity prices, including oil, is expected to continue for the time being. In the domestic stock market, sustained attention is needed on materials and energy sectors, which are sensitive to price increases.

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