It's time now for an in-depth look at markets around the world, including here in Korea.
And for that I'm joined on the line by Mr. Daniel Yoo, global strategist at Kiwoom Securities.
Mr. Yoo, thanks for coming on today.
So, overnight on Wall Street, U.S. tech stocks especially fell big time. The Nasdaq down almost 1-and-a-half percent and the Dow about a third of a percent. Obviously the blacklisting of Huawei. What's happening here?
With the news of us-china trade dispute worsening, global market continues to fall.
So far global market fell 5% from it peak in early May.
The news of restriction on Huawei products on trade resulted in big sell-out of most of global equity markets including US and China.
However, The U.S. government on Monday temporarily eased some trade restrictions imposed last week on China's Huawei, a move that sought to minimize disruption for the telecom company's customers around the world.
" The U.S. Commerce Department will allow Huawei Technologies to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets.
" Google did not immediately respond to a Reuters request for comment on the new authorization. The Wall Street Journal reported, however, that a person familiar with the matter said Google would be halting its plans to cut Huawei's access.
With this news most of the markets are recovering nicely.
Korean market up
Because of the trade tensions, the Korean currency has weakened right about to 12-hundred won against the dollar. We could end up seeing some intervention by the Korean financial authorities. How was it looking today, and when do you think it might turn around?
Given that Korea's interest rate is much lower than US, and Bank of Korea expect to lower interest rate by 25 basis points in late 3Q or beginning of 4Q, investors are betting on Korean won depreciating.
However, given the high level of trade surplus (4.12 billion in April), and relatively low amount of government debt (36.6% of GDP as end of 2018) won depreciation this much is unreasonable.
As government intervention starts most likely won should begin to appreciate gradually in the future. We expect by end of the year, Won to appreciate to 1140 levels.
Let's talk about oil for a minute. OPEC member and non-members like Russia met last weekend and agreed to cut production again this year. Oil prices have of course risen. Where do you see this going?
Oil rose for a second day on signs OPEC and its allies will extend production cuts beyond June, while a steadily deteriorating U.S.-China trade relationship kept prices from pushing higher.
The possible extension of supply curbs by the Organization of Petroleum Exporting Countries and its allies could be a catalyst for oil to resume this year's rally, which has floundered over the past month. Rising tension in the Middle East and involuntary output cuts from Venezuela to Russia have also been aiding prices, but the breakdown in relations between the world's two biggest economies is keeping gains in check.
Potential war between US and Iran also put pressure on oil price on the upside. However, continued production increase from US Shale gas companies, and Russia's efforts to participate more will keep the price stable between 60~65 level. Price will not be move fast beyond 70 dollars level like last year.
Alright, Mr. Yoo. We'll leave it there for today. Thanks for coming on. We appreciate your insights.