[Good Morning Market] Middle East Tensions and Surging Oil Prices Raise Concerns...Korean Stock Market Expected to Remain Cautious

All Three Major U.S. Stock Indexes Decline
Inflation Fears Reignite Amid Escalating Middle East Conflict
Tug of War Expected Around 7,000-Point Level for KOSPI

The major indexes of the U.S. stock market all declined. This drop was driven by rising international oil prices, which have reignited inflation concerns as heightened tensions followed escalating armed conflict in the Middle East. As a result, the Korean stock market is expected to see a cautious, wait-and-see sentiment around the 7,000-point level for the KOSPI.

On September 8 (local time), at the New York Stock Exchange (NYSE), the S&P 500 Index closed at 7,673.52, down 0.58% from the previous session. The tech-heavy Nasdaq Composite Index finished at 26,421.41, a decline of 0.32%. The Dow Jones Industrial Average, comprised of blue-chip stocks, ended down 1.18% at 52,786.07. This represents the steepest decline in about three weeks for the Dow.

During the weekend and the U.S. Labor Day holiday, instability across the Middle East intensified, fueling investor anxiety. Military tensions increased not only in the Strait of Hormuz but also in the Red Sea, heightening fears over potential disruptions to oil supplies. Yemen's Houthi rebels, who are aligned with Iran, claimed to have launched a large-scale retaliatory attack on Saudi Aramco’s facilities and airbases. Reports also emerged that a small Iranian oil tanker near Kharg Island—a key export hub for Iranian crude—was attacked by U.S. forces.

Amid strengthening supply concerns, international oil prices surged to nearly USD 100 per barrel. Brent crude futures closed at USD 97.92 per barrel, up 0.95% from the previous session, while West Texas Intermediate (WTI) futures soared by 1.69% to close at USD 93.03 per barrel.

Caution is also mounting ahead of next week’s Federal Open Market Committee (FOMC) meeting, in anticipation of the U.S. Consumer Price Index (CPI) data for August. As international oil prices rise, concerns are growing that inflationary pressures may intensify, potentially prompting the FOMC to consider a rate hike. The yield on the 10-year U.S. Treasury note also surpassed 4.8% again.

However, key semiconductor stocks showed strength, buoyed by Intel’s 10% hike in central processing unit (CPU) prices and continued momentum from OpenAI’s GPT-6 release. Shares of Intel jumped 9.05%, while AMD increased by 5.90% and Broadcom was up 2.98%.

The domestic stock market is expected to experience resistance near the 7,000-point level for the KOSPI, sustaining a cautious wait-and-see trend. The MSCI Korea ETF, which closely tracks movements in the Korean market, rose 0.55%. The Philadelphia Semiconductor Index also climbed by 1.30%.

Ji Yong Han, a researcher at Kiwoom Securities, stated, "Since August, the KOSPI has repeatedly failed to break above the 7,000 mark during intraday trading, prompting mainly individual investors to sell near this level and buy back at lower points. The fundamentals of semiconductor companies and earnings estimates for KOSPI-listed firms have not deteriorated, and foreign investors—who have turned net buyers this month—are absorbing stocks sold by individuals, which is helping defend the index’s lower limits. Therefore, it is unlikely these trends will shift the overall direction of the index."

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