[Good Morning Market] Oil Prices Surge to Record Highs, US Stocks Weaken... KOSPI Futures Also Decline

S&P 500, Dow, and Nasdaq All Decline
Oil Surges Above $100 on Iran's Hardline Rhetoric
Concerns Over Financial Crisis in Private Credit Market
KOSPI 200 Futures Drop by Over 4%

As tensions in the Middle East persist, oil prices have surged by more than 10%, leading to a decline in the US stock market. Analysts say that concerns over private credit, including redemption restrictions on private debt funds, have also contributed to the market correction. With the KOSPI 200 futures declining overnight, the domestic stock market is expected to experience volatility in the early session on March 13.

On March 12 (local time) at the New York Stock Exchange, the S&P 500 index closed at 6,672.62, down 1.5% from the previous day. The Dow Jones Industrial Average finished at 46,677.85, down 1.6%. The tech-heavy Nasdaq ended the session at 22,311.98, down 1.8%.

EPA Yonhap News

Although major countries decided the previous day to release a record amount of strategic petroleum reserves, concerns over crude oil supply related to the Strait of Hormuz persisted, dragging the market lower. Iran's Supreme Leader Seyyed Mojtaba Khamenei stated in his first official statement that "the leverage of blocking the Strait of Hormuz must continue to be used as a means of pressure against adversaries." As a result, oil prices surged again, surpassing $100 per barrel. On the New York Mercantile Exchange, April West Texas Intermediate (WTI) crude futures settled at $95.73 per barrel, up 9.71% from the previous session. On the ICE Futures Exchange, May Brent crude futures for delivery closed at $100.46 per barrel, up 9.2% from the previous session.

Han Ji-young, a researcher at Kiwoom Securities, analyzed, "However, considering that the United States is reviewing an exit strategy to prevent a prolonged war and further sharp spikes in oil prices, and that Iran is also facing mounting side effects such as energy depletion and increasing casualties if it continues fierce resistance, it is reasonable to assume that the likelihood of WTI surpassing its recent high of $120 and injecting stagflation risk into the stock market in earnest remains low."

Uncertainty surrounding the private credit market is also seen as having contributed to the weakness in equities. Alternative asset manager Cliffwater recently saw redemption requests amounting to about 14% of its private debt fund under management, leading it to cap redemptions at 7%. Previously, HPS Investment, an affiliate of the world's largest asset manager BlackRock, also received redemption requests equivalent to 9.3% of the value of its private debt fund, but limited redemptions to 5%. Last month, Blue Owl announced it would permanently halt redemptions from one of its operating funds.

With a series of private debt fund redemption suspensions, concerns have emerged about a possible recurrence of the 2008 subprime financial crisis. In the securities sector, there are worries that anxiety over both the Middle East situation and a potential financial crisis could undermine investor sentiment in the market.

Due to external pressures, the domestic stock market is also expected to open lower today. The KOSPI 200 night futures index, which is traded during overnight hours, declined by 4.3% overnight. Lee Sunghoon, a researcher at Kiwoom Securities, said, "Today, the domestic stock market is expected to start lower in early trading, reflecting external volatility factors such as concerns over a prolonged blockade of the Strait of Hormuz, rising oil prices, the won-dollar exchange rate surpassing the 1,490-won level, and declines in US semiconductor stocks."

Lee added, "With risk-aversion sentiment driven by the threat of war persisting and upward pressure building on the won-dollar exchange rate, it is uncertain whether foreign capital inflows that could drive the index higher will materialize in the short term. As a result, given that the index is unlikely to show a clear direction, the market is expected to be dominated by individual stock movements rather than by specific leading sectors for the time being."

This content was produced with the assistance of AI translation services.