[Good Morning Stock Market] Earnings Announcements, Additional Fiscal Policies... A Week Ahead with Important Events

[Asia Economy Reporter Oh Juyoun] On the 20th (local time), the U.S. stock market in New York closed higher, with the Nasdaq index surging 2.51%. The Dow Jones Industrial Average and the S&P 500 index rose by 0.03% and 0.84%, respectively, compared to the previous trading day. This was attributed to expectations surrounding the development of a COVID-19 vaccine and additional U.S. economic stimulus measures.

British pharmaceutical company AstraZeneca announced that in its Phase 1 clinical trial, all vaccinated individuals developed neutralizing antibodies and T cells. Meanwhile, U.S. pharmaceutical company Pfizer and German biotech firm BioNTech reported success in inducing an immune response in the second early trial of their experimental COVID-19 vaccine. T cells are known to contribute to immunity by identifying and destroying cells already infected by the virus.

Meanwhile, domestically, the direction of economic recovery and the upward trend of risk assets and the stock market remain valid, but it is expected that companies’ stock prices will fluctuate depending on their earnings results.

◆ Jinwoo Lee, Researcher at Meritz Securities: The process of cooling down overheated growth stocks is underway. I consider this a natural step due to concentration. It is difficult to predict the extent and duration of the price correction, but I expect it to remain within the trend. Overheating does not mean a trend deviation. If the trend does not change, the correction of leading stocks should be seen as a buying opportunity. I agree with concerns about short-term concentration. Some global growth stocks may face psychological resistance during this period.

Each growth stock has its own ‘story,’ but the ‘essence’ of growth is the same. Although the methods of growth differ, they share common stages: creating new markets (high sales growth phase), beginning to generate free cash flow (FCF: Free Cash Flow) (capital recovery phase), and maintaining high margins through strong market dominance. Stock price reactions have corresponded to inflection points in these phases. Amazon and Tesla are no different. Early stock price rebounds corresponded with sales growth, while further price increases were linked to improvements and expansions in FCF. The key point to watch in Tesla’s earnings announcement scheduled for the 22nd will likely be its ‘cash flow.’

◆ Sangyoung Seo, Researcher at Kiwoom Securities: In the U.S. stock market, the Nasdaq surged 2.5% due to positive vaccine data announcements, expectations for additional Republican economic stimulus policies, and improved earnings prospects for untact-related stocks. Considering it is earnings season, it is estimated that the market reacted sensitively to earnings issues. On the other hand, due to a sharp increase in new COVID-19 cases in the U.S., sectors affected by the virus saw selling pressure due to earnings concerns, highlighting sectoral differentiation.

Considering these changes in the U.S. stock market, the Korean stock market is also expected to see strength in untact-related stocks with high earnings improvement expectations. Additionally, Tesla’s surge following reports of record third-quarter sales is expected to positively impact related stocks.

Meanwhile, after the U.S. market close, IBM surged more than 6% in after-hours trading based on solid earnings, which is expected to further boost expectations for technology stocks. This trend is likely to result in a positive outlook for the Korean stock market, supported by the strength of growth stocks. However, uncertainties remain regarding additional U.S. unemployment benefits, difficulties in EU negotiations over COVID-19 relief funds, and the spread of the virus, suggesting a high possibility of sectoral differentiation.

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