[Good Morning Stock Market] US Treasury Yields Fall... Investor Sentiment Awakens

▲Major U.S. banks are concerned about losses due to energy company bankruptcies. The photo shows Wall Street, where the headquarters of major banks are located. (AP = Yonhap News)

[Asia Economy Reporter Junho Hwang] On the 7th, while the KOSPI struggled, falling 1.66%, the U.S. stock market closed higher overnight. Concerns about inflation and economic growth resurfaced, but a decline in U.S. bond yields and a renewed preference for risk assets led to the gains. Attention is focused on whether the KOSPI will rebound following this sentiment.

On the 7th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,180.14, up 264.36 points (0.80%) from the previous session. The S&P 500 rose 39.25 points (0.95%) to 4,160.68, and the tech-heavy Nasdaq index increased by 113.86 points (0.94%) to 12,175.23.

The three indices started lower as retailer Target warned that its second-quarter operating margin could decline due to inventory reduction. The World Bank (WB) also influenced the market by lowering its global economic growth forecast for this year to 2.9%. This is a 1.2 percentage point drop compared to the 4.1% growth forecast released in the January outlook report.

However, the decline in U.S. bond yields following news that the trade deficit decreased by 19.1% from the previous month provided an opportunity for a turnaround. The trade deficit level was below the forecast compiled by U.S. economic media Bloomberg.

In particular, U.S. Treasury Secretary Janet Yellen appeared at a Senate Finance Committee hearing and emphasized the need for appropriate fiscal policies to offset inflation. She stated, "We are currently facing macroeconomic challenges," adding, "Inflation is at an unacceptable level, supply chain disruptions caused by the pandemic are intensifying, and the oil and food markets are also disrupted due to Russia's invasion of Ukraine." She continued, "To reduce inflationary pressures without damaging the health of the labor market, appropriate fiscal policies are needed to complement the Federal Reserve's monetary policy."

This sentiment is expected to impact the Korean stock market as well. Sangyoung Seo, a researcher at Mirae Asset Securities, analyzed, "The highlighted stagflation concerns and the World Bank's report lowering trade volume by 1.8 percentage points compared to January pose a burden on Korea's export-dependent economy, but considering that these factors have already been reflected in the stock market, the impact is expected to be limited."

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