[Good Morning Market] U.S. Stocks Fall Across the Board on Surging Yields and Oil Prices... Korean Market Unsettled Too

U.S. 2-Year Treasury Yield Hits Highest Level in 19 Years
International Oil Prices Soar Well Above $100
Heightened Tension Over FOMC's Further Policy Tightening

U.S. Treasury yields and international oil prices surged, causing all major U.S. stock indexes to drop for a second consecutive day.

On the 15th (local time), the S&P 500 Index closed at 7,585.73, down 0.45% from the previous day. The tech-heavy Nasdaq Composite Index also fell 0.78% to end regular trading at 25,981.57. The Dow Jones Industrial Average dropped 0.63% over the same period to 52,093.11.

U.S. Treasury yields soared ahead of the Federal Open Market Committee (FOMC) policy rate decision set for the 17th. The 10-year yield rose as high as 5.041%, marking its highest level since July 2007. The two-year yield climbed 2.8 basis points (1bp=0.01%) to 4.661%, and the 30-year yield increased 3.6 basis points to 5.362%.

International oil prices also spiked. This is attributed to concerns over oil supply disruptions following the closure of Saudi Arabia’s East-West pipeline after a drone attack by Yemen’s Houthi rebels, as well as the suspension of oil loading operations at the Yanbu terminal on the Red Sea.

On the same day, at ICE Futures Exchange, November Brent crude futures settled at $108.75 per barrel, up 2.90% from the previous close. On the New York Mercantile Exchange, October West Texas Intermediate (WTI) crude futures jumped 4.38% to $105.83 per barrel. Both represent the highest prices since May 19.

The strengthening of expectations for further tightening between September and December at the FOMC is also seen to be driven by oil prices. According to CME FedWatch, the probability of two rate hikes by the December FOMC meeting stood highest at 49.5%. In a CNBC survey conducted the previous day, 55% of respondents expected more than two hikes within a year.

The domestic stock market is also expected to remain cautious. However, some see it as too early to determine that there has been a fundamental deterioration. The MSCI Korea ETF, which is closely linked to the domestic market, rose 0.15%, and the Philadelphia Semiconductor Index rose 0.4%.

Han Jiyoung, a researcher at Kiwoom Securities, commented, "Unless the FOMC delivers a major hawkish shock, such as raising the dot plot guidance to signal a much more aggressive tightening cycle, the likelihood of additional downside pressure from the Federal Reserve should be limited." Han added, "Considering that Broadcom CEO has stated AI demand remains strong despite recent debates over the pace of development, if concerns about tightening ease following this month’s FOMC meeting, the Korean stock market could return to its previous recovery trajectory."

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