[Good Morning Stock Market] "Plunging US Stock Market... Challenging Korean Stock Market"

As the US stock market plunged, the domestic stock market on the 9th is also expected to face difficulties. The absence of foreign demand and pressure from economic slowdown are expected to act as burdens.

[Image source=Reuters Yonhap News]

On the 6th (local time), the Dow Jones Industrial Average closed at 40,345.41, down 410.34 points (1.01%) from the previous day in the New York stock market. The S&P 500 index recorded 5,408.42, down 94.99 points (1.73%) from the previous trading day, and the tech-heavy Nasdaq index closed at 16,690.83, down 436.83 points (2.55%) from the previous session.

The US Department of Labor announced that nonfarm payrolls increased by 142,000 in August compared to the previous month. Although this was an increase from the previous month's gain (89,000), it was lower than experts' expectations (161,000). In particular, the sharp decline in tech stocks also had an impact. Nvidia (4.09%), Alphabet (4.02%), and Amazon (3.65%) fell significantly, while Microsoft (1.64%) and Apple (0.70%) also declined.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The US stock market closed lower amid broad selling pressure as concerns about economic slowdown grew after the August nonfarm payrolls fell short of expectations," adding, "The S&P 500 index fell 4.2% on a weekly basis, marking the worst week since March 2023."

The Morgan Stanley Capital International (MSCI) Korea Index ETF fell 3.7%, and the MSCI Emerging Markets Index ETF dropped 1.8%. Eurex KOSPI200 futures declined by 2.2%.

Researcher Kim Seok-hwan explained, "Foreigners' annual cumulative net purchases in the domestic stock market amounted to 11.3 trillion KRW in semiconductors, but outside of semiconductors, they net purchased 12.5 trillion KRW, resulting in a supply-demand reversal after four months," adding, "The absence of foreign demand, weakness in semiconductors, and increased pressure from economic slowdown are factors that raise downside risks in the stock market."

Kim Ji-won, a researcher at KB Securities, said, "Interpretations of the employment report vary, but remarks from Federal Reserve (Fed) officials are further fueling anxiety," adding, "With concerns that the pace of employment slowdown may accelerate, a decline is inevitable." She continued, "The Chuseok holiday closure and the upcoming Federal Open Market Committee (FOMC) meeting are also burdens, and significant issues such as the US presidential candidate debates are pending, so a conservative approach is necessary amid ongoing uncertainty."

Han Ji-young, a researcher at Kiwoom Securities, said, "Due to the supply-demand gap during the holiday and noise from the financial investment income tax (Fin-Income Tax), volatility caused by domestic factors may occur, so there is a possibility that the price-to-book ratio (PBR) could temporarily fall to 0.85, which it reached intraday on the 5th of last month," but added, "Considering the resilience and learning effect against current negative factors, stock price recovery is expected to strengthen below 2,500 points."