[Good Morning Market] U.S. Rebounds on Hopes for Middle East War Negotiations... Korea Also Expected to Rise

Trump Announces "Five-Day Suspension of Attacks on Iran"; U.S. Markets Rise
Eased War Fears Likely to Help Korean Stock Market Recover Losses

Amid a rebound in the U.S. stock market driven by expectations for war negotiations between the United States and Iran, the domestic stock market is also expected to show an upward trend.

Yonhap News

On the 23rd (local time), the Dow Jones Industrial Average closed at 46,208.47, up 631.00 points (1.38%) from the previous session. The S&P 500 index rose by 74.52 points (1.15%) to 6,581.00, while the Nasdaq Composite Index, which is focused on technology stocks, finished at 21,946.76, up 299.15 points (1.38%).

This appears to be due to heightened expectations for a Middle East war negotiation. On this day, U.S. President Donald Trump announced that he had productive talks with Iran and declared a five-day suspension of attacks against Iran. However, the Iranian side denied that any negotiations had taken place, so it is necessary to continue monitoring the situation. The fact that the U.S. stock market’s gains were limited to around 1% seems to be because the two sides hold conflicting positions.

Nevertheless, it is noteworthy that oil prices plummeted. The price of West Texas Intermediate (WTI) crude oil closed at $88.13 per barrel, down $10.10 (10.28%) from the previous session. The securities industry interpreted this as stemming from expectations that the normalization of the Strait of Hormuz as the war winds down will ease concerns over oil supply disruptions.

Amid such expectations, the domestic stock market on the 24th is also projected to rebound, recovering the losses from the previous day’s plunge. The previous day, as anxiety over war heightened following President Trump’s 48-hour ultimatum, the KOSPI fell by 375.45 points (6.49%) to 5,405.75, and the KOSDAQ dropped by 64.63 points (5.56%) to 1,096.89.

The fact that KOSPI 200 night futures closed with a sharp gain of over 6.2%, and that the won-dollar exchange rate, which had surpassed the 1,510-won level, has come down to the 1,480-won range, is expected to improve the foreign investment environment, particularly for large-cap stocks.

The domestic stock market has been experiencing unprecedented volatility. Since March, there have been a total of seven instances when the sidecar mechanism was triggered over 15 trading days in the KOSPI market. However, the securities industry is noting several factors: first, that the KOSPI had already factored in war risks with a nearly 20% plunge in just two trading days during the first week of March, thereby forming a price floor; and second, that profit momentum has remained robust even amid negative developments. When the KOSPI fell by about 13% since March, the forecast for this year’s KOSPI ‘leading operating profit’ was raised by about 4%, from 609 trillion won in early March to 635 trillion won.

Ji Young Han, a researcher at Kiwoom Securities, stated, “Although one of the possible scenarios is a downward revision of profit estimates, expanding short positions to reflect this could actually increase the upside risk at this stage. Given that both the United States and Iran have less to gain from a prolonged conflict, negotiations are now being discussed. Under these circumstances, a strategy focused on phased buying of stocks that have experienced excessive declines, rather than increasing short positions, is expected to be more effective.”

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