[Good Morning Stock Market] Growing ECB Tightening Concerns Weigh on 'KOSPI'

On the 8th, the KOSPI index opened at 2,633.53, up 7.19 points (0.27%), as dealers were busy working in the Hana Bank dealing room in Euljiro, Seoul. The won-dollar exchange rate started at 1,255.0 won, down 2.7 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Junho] On the 10th, South Korea's stock market was expected to face downward pressure due to the European Central Bank (ECB) signaling an interest rate hike and news of partial lockdowns in China due to COVID-19. Following the expiration of futures and options contracts the previous day, there was a recovery in market demand in the latter part of the session, but a subsequent pullback could occur, which is also expected to be a burden.

First, the U.S. stock market closed lower due to negative factors from Europe and China. The ECB held a monetary policy meeting and kept interest rates unchanged. However, in a press release, it announced plans to raise rates by 25 basis points in July. It also hinted at an additional hike in September. The size of the September increase depends on inflation trends, and if inflation worsens, a larger hike would be appropriate. As a result, U.S. Treasury yields rose, leading to weakness centered on technology stocks.

The continuation of COVID-19 city lockdown measures in China also acted as a burden. In some areas of Beijing, entertainment facilities were shut down due to cluster infections of COVID-19, and in some parts of Shanghai, it was announced that PCR testing for all residents would be conducted on the 11th.

These factors are expected to increase downward pressure on South Korea's stock market as well. Seo Sang-young, a researcher at Mirae Asset Securities, pointed out, "Due to supply and demand factors related to the futures and options expiration just before the market closed the previous day, a rebound was seen, so a partial pullback may occur, which is a factor expected to cause the market to start lower on this day."

Han Ji-young, a researcher at Kiwoom Securities, also analyzed, "The domestic stock market, which recorded a flat trend due to supply and demand issues related to the simultaneous expiration of futures and options on the previous trading day, is expected to face downward pressure due to the hawkish ECB meeting results and U.S. consumer price caution."

He added, "Until visible signs appear that inflation is being controlled or has peaked, volatility in the stock market is expected to continue. The U.S. consumer price index data to be released on the 10th is seen as the first turning point in June."

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