The domestic stock market is showing weakness, hampered by the US Federal Reserve (Fed)’s ‘hawkish’ stance.
According to the Korea Exchange on the 31st, the KOSPI opened down 2.58% at 6,613.58. As of 9:10 a.m., the ‘top two’ of the domestic stock market, Samsung Electronics and SK Hynix, were trading at 248,500 Korean won and 1.6 million Korean won, down 3.31% and 3.21%, respectively.
The sharp decline in the domestic stock market today is attributed to the hawkish remarks made by Kevin Warsh, a Fed governor, during his keynote speech at the Jackson Hole Economic Symposium on the 28th. Governor Warsh stated, “There needs to be confidence that core inflation is moving clearly and sufficiently quickly toward the 2% target. If not, there is still work to be done.” In response, the market is weighing the possibility that the US could raise its benchmark interest rate by 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting scheduled for September, which is seen as a burden on the stock market.
However, some in the securities industry suggest that the shock from the Fed may be limited. Han Ji-young, a researcher at Kiwoom Securities, said, “While Governor Warsh’s remarks were interpreted as hawkish, the market’s reaction, such as the limited decline in the three major US indices last Friday, suggests that the shock did not exceed the market’s capacity to handle it.” She added, “This week, the KOSPI is expected to attempt to break through the 7,000 mark again, influenced by changes in the supply and demand of semiconductor stocks following the release of earnings from US tech companies like Broadcom and Dell, as well as South Korea’s August export and import statistics.”
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