[Good Morning Stock Market] Profit-Taking Selling Expected... KOSPI Likely to Start Lower

On the 10th, the KOSPI is expected to start with a decline of around 0.7% compared to the previous day. This is due to the sharp drop in the Nasdaq index in the New York stock market the day before, and the anticipated profit-taking selling following recent gains.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,254.86, down 543.54 points (1.66%) from the previous session. The Standard & Poor's (S&P) 500 index fell 73.69 points (1.85%) to 3,918.32, and the Nasdaq index dropped 237.65 points (2.05%) to 11,338.35.

[Image source=Yonhap News]

That day, the New York stock market was weighed down by a sharp decline in bank stocks. The drop in bank stocks was triggered when SVB Financial Group, the parent company of Silicon Valley Bank in California, announced it would raise capital by issuing more than $2 billion in shares to offset losses from bond sales, causing the stock price to plummet by more than 60%.

Additionally, news of the voluntary liquidation of cryptocurrency bank Silvergate worsened investor sentiment. Silvergate stated that closing the business voluntarily in line with industry and regulatory developments was a top priority, leading to a stock price drop of over 40%.

Furthermore, political uncertainty increased due to U.S. President Joe Biden’s budget proposal and efforts to raise corporate taxes, which widened the losses. The Biden administration’s budget includes raising the top income tax rate for high earners and increasing corporate taxes.

On the previous day, the Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 2.45%. The MSCI Emerging Markets Index ETF also dropped 2.21%. As a result, the KOSPI is expected to start with a decline of around 0.7%.

Seosangyoung, a researcher at Mirae Asset Securities, said, “The Biden administration’s budget includes provisions to control U.S. capital investment in Chinese companies, which is expected to increase U.S.-China tensions and pose a burden,” but added, “Considering that the budget is unlikely to pass Congress easily, the impact will likely be short-term.” Han Jiyoung, a researcher at Kiwoom Securities, predicted, “Today, with caution over U.S. employment data results and growing concerns about systemic risk, downward pressure will persist, while defensive sectors are expected to show relative strength.”