[Good Morning Stock Market] Concerns Over US Economic Slowdown... KOSPI Expected to Start Lower

Traders are working on the floor of the New York Stock Exchange (NYSE) in the United States. (New York EPA=Yonhap News)

On the 21st, the KOSPI is expected to start slightly lower. This is likely influenced by the previous day’s decline in the U.S. stock market due to recession concerns and Tesla’s sharp drop.

The Dow Jones Industrial Average closed at 33,786.62, down 110.39 points (0.33%) from the previous session. The large-cap focused S&P 500 index ended at 4,129.79, down 24.73 points (0.60%), and the tech-heavy Nasdaq index closed at 12,059.56, falling 97.67 points (0.80%).

Sangyoung Seo, Head of Media Content at Mirae Asset Securities, stated, “The KOSPI is expected to start down around 0.3%.” He added, “The U.S. stock market’s increased volatility due to individual corporate issues and the late-session decline reflecting recession fears pose a burden on the Korean stock market.”

The reason for the U.S. market’s decline the previous day was that the U.S. Leading Economic Index fell to its lowest level in 2 years and 4 months. In March, the U.S. Leading Economic Index dropped 1.2% from the previous month to 108.4.

The Leading Economic Index, based on 2016 (=100), is an indicator that predicts economic turning points about seven months in advance. The March index underperformed both the previous month’s figure (-0.5%) and the forecast (-0.6%).

Weekly initial jobless claims reached 245,000, exceeding both the previous week’s 240,000 and the consensus of 240,000. Continuing claims also rose to 1,865,000, surpassing the previous week’s 1,804,000 and the consensus of 1,820,000. This is interpreted as the U.S. employment level nearing its peak.

The Philadelphia Fed Manufacturing Index for April was -31.3, below both the previous month’s -23.2 and the consensus of -19.2. While employment (-0.2, consensus -2.6) and business conditions (-1.5, consensus -11.9) showed improvement, new orders (-22.7, consensus -21.2) and capital expenditures (-5.4, consensus 8.3) were weak.

The increasing possibility of a U.S. recession is a burden on the Korean stock market. If a U.S. recession becomes apparent in the second half of this year, Korea’s export slowdown may continue. This could lead to weakened investor sentiment toward the Korean stock market, negatively affecting foreign investor flows.

However, Tesla’s sharp drop is considered to have already been reflected in the Korean market the previous day. Alongside this, TSMC’s solid earnings and expectations of a semiconductor industry bottom are expected to have a positive impact. Head Seo analyzed, “The won-dollar exchange rate is expected to start down by 2 won, and after a decline at the start, the KOSPI’s volatility is likely to widen depending on foreign investor flows.”

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