[Good Morning Stock Market] U.S.-Driven Geopolitical Risks Intensify... KOSPI Faces 3,000-Point Test

U.S.-Iran Tensions Escalate; Powell's Testimony Ahead
Rising Uncertainty... KOSPI Faces Tug-of-War Over 3,000 Points

Geopolitical uncertainty is intensifying as the United States has launched an attack on Iran. Concerns over a possible blockade of the Strait of Hormuz have caused international oil prices to surge, while U.S. stock index futures are all trending downward. With major events such as U.S. semiconductor export restrictions and Federal Reserve Chair Jerome Powell's congressional testimony still ahead, there are projections that the KOSPI will be tested on whether it can firmly settle above the 3,000-point mark this week.

As of 6:30 p.m. local time on the 22nd, Dow Jones Industrial Average futures had fallen by 0.43%. S&P 500 futures and Nasdaq futures also dropped by 0.46% and 0.60%, respectively. News that Iran is considering a blockade of the Strait of Hormuz in response to the U.S. airstrike has had a negative impact.

The Strait of Hormuz is a passageway for about 20% of the world's crude oil, and a blockade here could cause international oil prices to soar. Oxford Economics warned that in the worst-case scenario, international oil prices could rise to $130 per barrel, and U.S. inflation could approach 6%.

Uncertainty in the U.S. stock market, which ended last week on a weak note, appears to be deepening. On June 20, the S&P 500 index closed at 5,967.84, down 0.22% from the previous day on the New York Stock Exchange (NYSE). The tech-heavy Nasdaq Composite also finished at 19,447.41, down 0.51% from the previous session. Only the Dow Jones Industrial Average closed slightly higher, up 0.08%.

On June 23, the first trading day of the week, the preliminary June S&P U.S. Manufacturing and Services Purchasing Managers' Indexes (PMI) will be released. These are key indicators for gauging the state of the U.S. economy. On June 24 and 25, Chair Powell is scheduled to appear before the U.S. House of Representatives for two days of congressional testimony as part of the semiannual monetary policy report. He is expected to explain the current status of the U.S. economy and monetary policy, address internal and external risks, and present his views on the future path of interest rates.

The U.S. government’s potential semiconductor export restrictions, which are closely linked to investor sentiment toward domestic semiconductor stocks, are also a key issue. The U.S. Department of Commerce is reportedly considering revoking the "comprehensive export exemption" that currently allows semiconductor companies worldwide to export U.S. equipment to China. This could put companies at risk of increased costs, as they would have to obtain export licenses for each shipment.

The domestic stock market is drawing attention as to whether the KOSPI can maintain its position above the 3,000-point level for the first time in three and a half years. Since the beginning of this month, foreign investors have continued large-scale net purchases totaling over 5 trillion won, with expectations for improved corporate governance and the formation of an extra budget serving as key drivers.

Analysts say that as policy momentum remains valid and expectations for inclusion in the MSCI Developed Markets Index persist, there are still factors supporting a rise in the index. However, caution is warranted as the recent sharp gains have led to an accumulation of profit-taking pressure. Han Jiyeong, a researcher at Kiwoom Securities, said, "While news of reciprocal actions between Iran and the U.S. during the week may trigger volatility in the stock market, I believe a wait-and-see approach is more appropriate than expanding sales of risk assets," adding, "This week, the KOSPI is expected to trade around the 3,000-point level, influenced by events originating in the U.S."