[Good Morning Stock Market] US Stocks Fall Amid Rising Middle East Tensions... Korea Also Affected

The U.S. New York stock market fell as the Middle East crisis escalated due to Iran's retaliatory attack on Israel. On the 2nd, the Korean stock market is expected to be affected by the unease stemming from the Middle East situation.

[Image source=Reuters Yonhap News]

On the 1st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 42,156.97, down 173.18 points (0.41%) from the previous trading day. The S&P 500 index, focused on large-cap stocks, fell 53.73 points (0.93%) to 5,708.75, and the tech-heavy Nasdaq index also dropped 278.81 points (1.53%) to 17,910.36.

The concern that Iran's direct strike on Israel could escalate into a full-scale war pulled down stock prices. Iran fired about 180 ballistic missiles targeting Israel. This comes about five months after missile and drone attacks on Israeli mainland on April 13-14 this year.

However, Iran's attack was confirmed to have ended without significant casualties. As a result, most indices, including the Nasdaq which had fallen as much as 2.25% during the session, recovered some of their losses.

Market analysts also forecast a low likelihood of full-scale war between Iran and Israel. Park Sang-hyun, a researcher at IM Securities, said, "The possibility of this situation escalating to the worst-case scenario, that is, a full-scale war between Israel and Iran, is low, so it is likely to remain a short-term negative factor. Given that the U.S. presidential election is just a month away, the Biden administration would not want further deterioration of the Middle East situation." He added, "Although Iran launched retaliatory attacks, they are more of a domestic and international show of force in response to a series of Israeli attacks, rather than an offensive seeking full-scale war with Israel."

However, with foreign media reports that Iran is preparing a second attack and Israel also declaring retaliation, fears of full-scale war are expected to continue.

The domestic stock market is also likely to be influenced by the Middle East crisis and Macquarie Securities' downgrade of Samsung Electronics' target price. Macquarie lowered its investment rating on Samsung Electronics from 'buy' to 'neutral' in a report at the end of last month. The target price was also cut from 125,000 won to 64,000 won.

Kim Ji-won, a researcher at KB Securities, said, "With the upcoming preliminary earnings announcement next week, Samsung Electronics' global workforce reduction plan and Macquarie's target price downgrade report are burdens. The foreign media reports that Iran is preparing a second attack and Israel's declaration of retaliation mean that fears of full-scale war have not been alleviated."