Price indicators such as exchange rates, oil, metals, grains and freight rates that affect companies' costs and revenues. 20 terms in total.
The amount of Korean won needed to buy one US dollar. When it rises (a weaker won), exporters' profits translated into won increase, but foreign investors may sell Korean stocks out of concern for currency losses.
e.g. If the rate moves from 1,300 to 1,400 won, the same $1 of sales is worth 100 won more.
An index showing the dollar's average value against six major currencies, including the euro, yen and pound. It gives a quick read on overall dollar strength and is used to gauge emerging-market stocks and commodity price trends.
A strong dollar means the dollar is rising in value; a weak dollar means it is falling. A strong dollar tends to cut profits of US companies with large overseas sales and pull money out of emerging markets, while a weak dollar tends to do the opposite.
e.g. If a US company earns 100 euros in Europe, its sales shrink in dollar terms when the dollar strengthens.
Stocks whose profits rise when the USD/KRW rate goes up. Exporters with high overseas sales, such as semiconductors, autos and shipbuilders, are typical examples, while airlines, refiners and food companies that import raw materials in dollars can face higher costs.
A transaction that locks in an exchange rate in advance to reduce gains and losses from currency moves. Overseas ETFs and funds come in hedged (H) and unhedged (UH) versions, so the same asset can return different amounts depending on the exchange rate.
e.g. An unhedged US stock ETF earns a won-denominated gain when the dollar rises, even if the stock price stays flat.
Foreign-currency assets, such as US dollars, held by a central bank and government as a buffer against crises. Ample reserves can stabilize the market when exchange rates swing sharply, so they are used as a gauge of a country's creditworthiness.
When exchange rates move too fast, the government or central bank buys or sells foreign currency directly, or issues verbal warnings, to slow the pace. Signs of intervention can shift exchange rates as well as exporter stocks and foreign investor flows.
Borrowing low-interest yen to invest in assets in higher-yielding countries. If Japanese rates rise or the yen suddenly strengthens, the money can rush out all at once, causing global stocks to plunge.
e.g. Borrowing low-rate yen to buy higher-yielding US Treasuries lets you earn the interest rate difference.
The benchmark prices for global oil. WTI is the price of US crude and Brent is the price of North Sea crude. Rising oil prices fuel inflation and raise costs for airlines and transport companies.
A group of oil-producing countries made up of OPEC members plus other producers such as Russia. It decides at its meetings whether to raise or cut crude output, and those decisions can move oil prices and refiner and energy stocks sharply.
e.g. If OPEC+ announces a production cut, oil prices tend to rise and refiner and oil-producer stocks tend to move with them.
The price of refined products such as gasoline and diesel minus the price of crude oil. It directly shows a refiner's profitability, so a rising margin lifts earnings expectations for refiner stocks.
e.g. Korean refiners closely watch the Singapore complex refining margin.
Contango is when the futures price of a commodity for a distant date is higher than the current price; backwardation is the opposite. Commodity futures ETFs roll their contracts at each expiry, so heavy contango can build up losses even if the commodity price stays flat.
Henry Hub, in Louisiana, is the pricing point for US natural gas and the benchmark for US gas prices. Gas prices affect power generation costs and the earnings of LNG exporters and chemical companies.
Gold is a classic safe-haven asset whose demand rises in uncertain times such as economic crises and wars. It pays no interest, so its price tends to rise when real interest rates fall or the dollar weakens.
Copper is used across industry, from wiring and construction to electric vehicles, so its price is seen as a leading indicator of the economy, earning it the nickname Dr. Copper. It is also tied to demand from data center and power grid investment.
e.g. A rising copper price is often read as a sign of growing hopes for an economic recovery.
Prices of key raw materials for EV batteries. Higher prices benefit miners and materials makers but raise costs for battery manufacturers, and the lag in passing them through to selling prices can make battery company earnings volatile.
The price of the key raw material for steelmaking, which depends heavily on China's construction and steel sector. A steelmaker's earnings hinge on the spread between raw material prices and steel product prices.
Prices of grains such as wheat, corn and soybeans. They swing sharply with weather and conditions in exporting countries, and rising prices raise costs for food and feed companies and affect inflation.
The SCFI tracks container ship rates from Shanghai, and the BDI tracks bulk carrier rates for commodities such as iron ore, coal and grain. They are used to gauge shipping company earnings and the flow of global trade.
e.g. A sharp jump in the SCFI raises profit expectations for container shipping companies.
A long-term upswing in which commodity prices rise sharply over several years to decades. It occurs when huge new demand appears, as during China's high-growth years, and supply cannot keep up, and it greatly benefits materials and energy sectors.