[Good Morning Stock Market] US Stocks Fall on Inflation Concerns... "KOSPI Expected to Start Lower"

On the 7th, the domestic stock market is expected to start slightly lower. Concerns about inflation due to the continued rise in international oil prices and the possibility of further tightening by the Federal Reserve (Fed) following strong U.S. ISM Services Purchasing Managers' Index (PMI) are expected to act as negative factors.

[Image source=Yonhap News]

On the 6th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,443.19, down 198.78 points (0.57%) from the previous trading day. The S&P 500, which is centered on large-cap stocks, fell 31.35 points (0.70%) to 4,465.48, and the Nasdaq, focused on technology stocks, dropped 148.48 points (1.06%) to 13,872.47.

The market's caution toward monetary tightening intensified as stronger-than-expected economic indicators, rising oil prices, and increasing government bond yields coincided. Additionally, the positive economic data added to the burden. The U.S. ISM August Services PMI stood at 54.4, the highest level since February. This figure exceeded the market forecast of 52.5. A PMI above 50 indicates economic expansion, while below 50 signals contraction.

International oil prices also rose for the ninth consecutive trading day. The October delivery West Texas Intermediate (WTI) crude oil futures price increased by $0.85 (0.98%) from the previous trading day to $87.54 per barrel. This is the highest closing price since November 11 of last year.

Due to these factors, the KOSPI is expected to start down about 0.3% from the previous trading day. Sangyoung Seo, a researcher at Mirae Asset Securities, said, "The Korean stock market fell the previous day as international oil prices rose due to supply reduction issues rather than demand increases, highlighting concerns about the economy and inflation. Meanwhile, the U.S. stock market's decline, centered on technology stocks, was pressured by rising inflationary pressures, a stronger dollar, and higher interest rates, which burdens the Korean stock market."

By sector, volatility is expected to increase among Apple value chain-related stocks. The Chinese government’s ban on using iPhones and foreign brand electronic devices for official work or bringing them into offices at central institutions is expected to act as a burden.

Jiyoung Han, a researcher at Kiwoom Securities, said, "From a sector perspective, changes in growth stocks centered on Apple value chain-related stocks will be key. In the U.S. stock market, Apple sharply declined not only due to European Union (EU) regulatory issues but also because of news that the Chinese government instructed civil servants to ban iPhone use over concerns about information leaks." She added, "In the domestic stock market, we need to prepare for increased price and supply-demand volatility in Apple-related value chain stocks."