[Good Morning Stock Market] US Stocks Fall on Earnings Disappointments and Rising Treasury Yields... KOSPI Expected to Start Weak

Overnight, the U.S. stock market closed lower due to unstable conditions in the Middle East, disappointing earnings from major listed companies, and rising government bond yields. The KOSPI is also expected to start lower on the 19th.

On the previous day (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,665.08, down 332.57 points (0.98%) from the previous session. The Standard & Poor's (S&P) 500 index fell 58.60 points (1.34%) to 4,314.60, and the Nasdaq index also dropped 219.45 points (1.62%) to 13,314.30.

U.S. President Joe Biden (center), returning from a visit to Israel, is giving an interview at the Ramstein Air Base in Germany on the 18th (local time) during a refueling stop.
[Image source=Yonhap News]

Recently, the war between Israel and the Islamic militant group Hamas in the Gaza Strip has heightened tensions in the Middle East, acting as a negative factor for the market. U.S. President Joe Biden, visiting Israel, secured permission from Israel to allow humanitarian aid into the Gaza Strip, but the situation worsened after an explosion at a hospital in Gaza City killed hundreds, and a scheduled meeting with Middle Eastern leaders in Jordan was canceled, further escalating tensions. Additionally, Iran urged member countries of the Organization of Islamic Cooperation (OIC), which is involved in the war, to sanction Israel and ban oil sales to Israel. This increased the risk of Iranian involvement and added upward pressure on oil prices.

Third-quarter earnings from major U.S. companies were also disappointing. Logistics company JB Hunt reported results that fell short of market expectations, causing its stock to drop more than 8%. United Airlines’ stock fell over 9% following a downward revision of its guidance for the next quarter. Delta Air Lines’ stock also declined by more than 4%.

Rising government bond yields added to the pressure. The 10-year yield rose intraday to 4.93%, and the 30-year yield climbed to 5.03%, both reaching their highest levels since 2007. The 2-year yield also increased to 5.24%, marking the highest level since 2006.

The KOSPI is expected to open down about 0.7 to 1.0% on the day. Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, "Although China’s economic indicators came out favorably yesterday, economic uncertainty remains high. Conversely, the U.S. economy is performing well, leading to a growing divergence in economic conditions between countries and regions. This is reflected in monetary policy, with U.S. Treasury yields rising daily, increasing upward pressure on interest rates in major countries including South Korea." He added, "Attention should be paid to the results of the Bank of Korea’s Monetary Policy Committee meeting this morning, and it is necessary to respond to the market from a conservative perspective."