[Good Morning Stock Market] COVID-19 Impact Confirmed Period... "Stock Market Rise Speed Slows Down"

[Asia Economy Reporter Minji Lee] The U.S. New York stock market showed mixed trends ahead of the first-quarter earnings announcements and real economy indicators. Although OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) member countries and non-OPEC coalition) reached an agreement on production cuts, it did not significantly impact the stock market. The market expects major companies listed on the New York stock exchange to report their worst performance due to the impact of the novel coronavirus disease (COVID-19).

◆ Sanghyun Park, Researcher at Hi Investment & Securities = This week, U.S. real economy indicators and sentiment indicators are expected to be released. March retail sales and housing starts are forecasted to decline by 8% and 18.3%, respectively, compared to the previous month. The leading economic index is also estimated to plunge by 7% month-over-month.

The New York manufacturing index, a sentiment indicator, is expected to fall from ?21.5 in the previous month to ?35. This level is lower than the lowest point (-34.3) during the global financial crisis. The National Association of Home Builders (NAHB) housing index for April is also estimated to drop sharply from 72 in March to 56. Not only in the U.S., but China’s first-quarter GDP growth rate is also expected to decline sharply by 6% year-over-year.

The problem is that the plunge in March real economy indicators and April sentiment indicators is likely to continue into the second quarter. Although there are reports that the number of new COVID-19 cases in the U.S. and Europe has passed its peak, this does not mean a full resumption of economic activities.

◆ Inhwan Ha, Researcher at Meritz Securities = The KOSPI rebounded very quickly from 1450 points to 1850 points due to policy responses and technical rebounds. However, from now on, it is judged that it will be difficult to maintain such a rapid upward trend. The pace of increase will inevitably slow down, and the possibility of correction should be prepared for.

To surpass 1900 points, signals indicating that new COVID-19 cases have peaked must appear. The global stock market rebounded from mid-March largely due to the slowdown in new cases in Italy. After Italy recorded its peak of new COVID-19 cases on March 21, the global stock market showed a rebound. Ultimately, news that new cases in the U.S. have peaked is necessary for a rebound.

Economic activity must also resume. Passing the peak of new cases does not necessarily mean economic activities have restarted. The lockdown in Wuhan was lifted only two months after China recorded its peak of new cases. Italy still has about 4,000 new cases daily. In the U.S., it is likely to take longer than in China for full economic activities to resume, so it will be difficult for the stock market to recover to its peak in the short term based solely on expectations of improvement.

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