After Moody's, a global credit rating agency, downgraded the U.S. credit rating from the highest level of 'Aaa' to 'Aa1' for the first time in 108 years, the KOSPI index fell below the 2600 mark during the trading session. This was the first time since 9th (closing at 2577.27) that it dropped in 6 trading days.
As of 10:18 a.m. on the 19th, the KOSPI index is trading at 2599.54, down 27.33 points (1.04%) from the previous transaction.
On that day, the domestic securities market showed weakness early in the trading session following news that Moody's had downgraded the U.S. credit rating over the weekend. The U.S. has lost its highest rating from all three major credit rating agencies: Standard & Poor's (S&P), Fitch, and Moody's.
Moody's noted, 'The U.S. administration and Congress have failed to agree on measures to reverse the trend of large fiscal deficits and increasing interest expenses' and explained the background for the credit rating adjustment, saying that there is little likelihood that mandatory spending and deficits will substantially decrease in the coming years.
In this regard, there are opinions that short-term volatility in global financial markets may increase. However, experts expect that the impact of this adjustment on the domestic market will be limited.
Kim Yong-gu, a researcher at Yuanta Securities Korea, said, 'This downgrade of U.S. credit rating has a strong characteristic of pre-emptive negative factors that have already been known through the downward adjustments of two credit rating agencies,' and added, 'Considering that the Federal Reserve is likely to reduce interest rates about twice in the second half of the year, the impact on domestic and foreign stock markets will be limited to short-term noise.'
Lee Kyung-min, a researcher at DAISHIN SECURITIES, also mentioned, 'As global stock markets and the KOSPI index have entered an overheating phase, a phase of product digestion is expected,' but added, 'It will not be a sharp decline or shock.'