[Good Morning Stock Market] Uncertainty in US Debt Ceiling Negotiations... KOSPI Expected to Start Lower

On the 24th, the KOSPI is expected to start lower due to increased uncertainty over the US debt ceiling negotiations.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,055.51, down 231.07 points (0.69%) from the previous session. The Standard & Poor's (S&P) 500 index fell 47.05 points (1.12%) to 4,145.58, and the Nasdaq index dropped 160.53 points (1.26%) to 12,560.25.

[Image source=Yonhap News]

The New York stock market opened lower amid concerns over economic contraction due to a slowdown in manufacturing indicators despite expectations for debt ceiling negotiations. Meanwhile, some Republican lawmakers expressed doubts about the June 1 deadline, increasing the possibility of delays in the Republican debt ceiling negotiations, which contributed to the decline.

Additionally, during the session, the sell-off intensified following reports that US bombers and Russian fighter jets came close to engagement amid escalating tensions between the US and Russia over the Ukraine war. Large tech stocks such as Alphabet, Microsoft, Nvidia, and Apple all showed weakness, weighing down the market.

On the previous day, the Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 1.2%. The MSCI Emerging Markets Index ETF also declined by 1.55%. Considering this, the KOSPI is expected to start down about 0.7% on the day.

Seo Sang-young, a researcher at Mirae Asset Securities, said, “The domestic stock market has risen for seven consecutive trading days until the previous day, so there is a strong desire for profit-taking,” adding, “The US stock market’s weakness due to concerns over delays in debt ceiling negotiations and the Ukraine war will be a burden on the domestic stock market.” He further noted, “Moreover, indicators showing a contraction in the US manufacturing economy also weigh on the domestic market, as this is a cause of sluggish Korean exports and may increase concerns about corporate earnings.”

Han Ji-young, a researcher at Kiwoom Securities, analyzed, “Since the domestic stock market has recently shown a continuous upward trend, there is a possibility of short-term profit-taking triggered by the US market’s weakness,” adding, “Considering this, the overall index trend is under increasing downward pressure.” She also predicted, “The market will show differentiated price movements depending on supply and demand changes among major domestic large sectors and stocks such as secondary batteries, semiconductors, automobiles, and shipbuilding.”

Meanwhile, the previous day’s New York Non-Deliverable Forward (NDF) 1-month won-dollar exchange rate was 1,318.79 won. Reflecting this, the won-dollar exchange rate is expected to start about 5 won higher on the day.