[Good Morning Market] U.S. Stocks Pause, Korean Market Still in "Honeymoon" Phase

Despite Progress in U.S.-China Talks, Market Pauses
Geopolitical Uncertainties Remain Over Iran Nuclear Negotiations
Foreign Investors Return to Korean Market, Betting on Governance Improvements

The U.S. stock market showed signs of hesitation ahead of its previous highs. This is interpreted as being due to lingering geopolitical uncertainties, despite progress in U.S.-China negotiations. In contrast to these external circumstances, the Korean stock market is continuing its so-called "honeymoon rally."

On June 11 (local time), the S&P 500 Index closed at 6,022.24, down 0.27% from the previous day on the New York Stock Exchange. The tech-heavy Nasdaq Index also ended the session at 19,615.88, a decline of 0.50% from the previous day. The Dow Jones Industrial Average closed at 42,865.77, down 1.10 points (0.00%) from the previous day.

The market opened slightly higher on news that a framework for implementing the results of the second round of U.S.-China trade negotiations had been established. U.S. President Donald Trump also announced on his social media platform, Truth Social, that "all necessary rare earth elements will be supplied from China in the form of advance payments."

Another positive factor was that the U.S. inflation rate for May did not rise as much as had been feared, despite President Trump's tariff policies. According to the U.S. Department of Labor, the core Consumer Price Index (CPI), which excludes the volatile energy and food sectors, rose 2.8% in May compared to the same month last year, remaining at the April level. This was also below the expert consensus forecast of 2.9%.

Nevertheless, the New York stock market turned weaker as concerns about escalating tensions in the Middle East came to the forefront. According to major foreign media outlets such as the Associated Press, the U.S. government ordered the withdrawal of non-essential personnel from the U.S. Embassy in Iraq, citing heightened security risks in the Middle East. Iran also warned that, ahead of the sixth round of nuclear negotiations with the U.S., it could attack all U.S. military bases in the Middle East if talks break down and conflict erupts.

Geopolitical instability also led to a sharp rise in international oil prices, putting additional pressure on the stock market. On this day at the ICE Futures Exchange, the front-month Brent crude oil futures closed at $69.77 per barrel, up 4.34% from the previous day. This is the first time in two months that Brent crude has exceeded $69 per barrel since President Trump announced his reciprocal tariff policy in early April. West Texas Intermediate (WTI) also rose 4.88% from the previous session to $68.15 per barrel.

In the domestic market, a "honeymoon rally" is underway regardless of external conditions. This week alone, the KOSPI has risen by 100 points and surpassed 2,900 for the first time in three years as of the previous day. The MSCI Korea ETF, which is closely linked to the domestic market, rose 1.25%. The MSCI Emerging Markets ETF also gained 0.42%. The Philadelphia Semiconductor Index declined by 0.19%.

Foreign investors are also aggressively buying, placing their hopes on improvements in corporate governance. However, in the short term, foreign investors may feel burdened by the rapid surge in prices. Han Jiyeong, a researcher at Kiwoom Securities, explained, "Since today is the simultaneous expiration date for futures and options, it will be necessary to prepare for increased volatility in both the spot and futures markets as the session progresses."