[Good Morning Stock Market] US Stocks Fall on High Interest Rate Concerns... KOSPI Expected to Start Lower

Amid concerns over prolonged high interest rates and disappointing earnings announcements from Dutch semiconductor company ASML, the U.S. stock market closed lower, and the KOSPI index is expected to start lower on the 18th.

[Image source=Reuters Yonhap News]

On the 17th (local time), at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 37,753.31, down 45.66 points (0.12%) from the previous trading day. The large-cap-focused S&P 500 index fell 29.2 points (0.58%) to 5,022.21, and the tech-heavy Nasdaq index closed down 181.88 points (1.15%) at 15,683.37.

The previous day, Jerome Powell, Chair of the Federal Reserve (Fed), stated, "Given the current strength of the labor market and the inflation progress so far, it is appropriate to allow restrictive policies time to take effect." The market interpreted this as the Fed maintaining its outlook for three rate cuts this year at the March Federal Open Market Committee (FOMC) meeting while revising the dot plot.

As a result, tech stocks sensitive to interest rates showed a notable decline. ASML’s weak first-quarter earnings also dampened investor sentiment across semiconductor-related stocks. Nvidia, a leading AI semiconductor stock, fell 3.87%, while Broadcom (-3.5%), AMD (-5.8%), Micron (-4.5%), and Lam Research (-5.3%) also showed weakness.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) dropped 0.7%, and the MSCI Emerging Markets Index ETF fell 0.1%. Eurex KOSPI 200 futures declined 0.4%. Accordingly, the KOSPI is expected to open down by 0.5 to 0.8%.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Although stabilization is expected due to financial authorities’ intervention amid recent won weakness and trilateral cooperation among Korea, the U.S., and Japan, the situation cannot be viewed optimistically. Attention is needed regarding semiconductor sell-offs triggered by ASML in the domestic market." However, he also noted, "It is positive that foreigners’ 'net buying' trend in semiconductors continues on a monthly and yearly basis."

Kim Ji-won and Lim Jeong-eun, researchers at KB Securities, explained, "Due to Middle East geopolitical risks, exchange rate, and rapid interest rate hikes, the KOSPI has fallen below the 2,600 level for four consecutive trading days. However, with strong U.S. Treasury auctions leading to interest rate declines and the Korea-U.S.-Japan finance ministers’ meeting reaffirming concerns over won weakness, a stabilization trend is expected." They added, "Concerns over semiconductor earnings remain key but were partially reflected yesterday. After absorbing early session sell-offs, the market is expected to be linked to exchange rates and foreign demand."

Meanwhile, the one-month non-deliverable forward (NDF) won-dollar exchange rate in New York stood at 1,377 won, and the won-dollar exchange rate is expected to open down by 10 won on the day.