[Good Morning Stock Market] Stock Market Cold Wave Forecast... Will the Stock Stabilization Fund Be Activated?

On the 18th, when the morning low temperature in Seoul continued to drop to minus 7 degrees Celsius, icicles formed on the branches along the Han River embankment in Yeouido, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Hwang Junho] On the 11th, South Korea's stock market is expected to open lower, influenced by the continuous decline in the US stock market due to concerns over the extension of the Federal Reserve's aggressive tightening policy following strong employment data.

On the 10th (local time), the US stock market fell. Various negative factors weighed on the market, including expectations that the Federal Reserve would continue its aggressive tightening due to strong September employment data, heightened risks of escalation between Russia and Ukraine, and ongoing financial instability despite additional market interventions by the Bank of England. The Dow fell 0.32%, the S&P 500 dropped 0.75%, and the Nasdaq declined 1.04%. The Greater China stock markets also fell. Semiconductor-related stocks dropped sharply amid concerns over US administration's semiconductor sanctions.

Charles Evans, President of the Federal Reserve Bank of Chicago, stated that the policy rate next year will exceed 4.5% and that rates will be maintained at levels that restrain the economy for a considerable period. The securities industry interpreted this as a possibility that the Federal Open Market Committee (FOMC) might raise the benchmark interest rate by another 75 basis points next month.

Seosangyoung, a researcher at Mirae Asset Securities, said, "Following the sharp 3.80% plunge in the Nasdaq amid rising government bond yields the previous day, the continued decline today will further dampen investor sentiment in South Korea's stock market." He added, "Especially, the Philadelphia Semiconductor Index fell 6.06% on the 7th and dropped another 3.45% today, which will further weaken market sentiment."

Han Jiyoung, a researcher at Kiwoom Securities, said, "Many of the negative factors have already been priced in both technically and in terms of valuation." She added, "It is necessary to keep open the possibility that market sentiment could change depending on the results of the US September Consumer Price Index (CPI) scheduled for the 13th." The expected September CPI is around 8.1?8.2%, similar to August's 8.3%.

Han also stated, "In response to the recent market crash, the operation of the Stabilization Fund (estimated at about 800 to 900 billion KRW) is being actively discussed by government agencies including the Financial Services Commission. Therefore, it is expected that intraday market flows will change depending on related news."

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