[Good Morning Stock Market] US Stocks Rally on Stimulus Hopes... "Domestic Market Expected to Show Sectoral Divergence"

[Image source=Yonhap News]

[Asia Economy Reporter Ji-hwan Park] The U.S. New York stock market showed strength amid expectations for additional stimulus measures related to the novel coronavirus (COVID-19). The Standard & Poor's (S&P) 500 index and the Nasdaq index set new intraday and closing highs once again. In particular, large technology stocks, semiconductors, banking stocks, and leisure sectors led the gains based on improved earnings. Experts predict that the domestic stock market will also experience a differentiated market by stock centered on earnings stocks, as some expectations related to stimulus measures have already been partially reflected.

◆ Sang-young Seo, Researcher at Kiwoom Securities = Differentiation centered on stocks expected to improve earnings is likely to continue. The Korean stock market rose the previous day on news of improved manufacturing indicators in China and the People's Bank of China supplying 300 billion yuan (50 trillion won) through a medium-term liquidity support window. It was also notable that the semiconductor sector led gains after Micron significantly raised its earnings estimates at its annual technology conference. Additionally, Senate Majority Leader Mitch McConnell's assertion that additional stimulus could be passed by the end of the year is estimated to have strengthened foreigners' net buying trend in spot and futures markets. The U.S. stock market rose as news of additional stimulus from Congress and the Federal Reserve increased risk asset preference. In particular, large technology stocks, semiconductors, banking stocks, and leisure sectors led the gains based on improved earnings. However, among the factors driving the U.S. stock market rise, the semiconductor index increase was already priced in the previous day, and the additional stimulus negotiations were partially reflected by McConnell's remarks, so the rise in the Korean stock market is expected to be limited. Considering this, the Korean stock market is expected to show limited gains while differentiation will proceed with buying interest flowing mainly into stocks with high expectations for earnings improvement.

◆ Hi Investment & Securities = The U.S. stock market closed higher influenced by vaccine optimism and strong Chinese manufacturing indicators despite mixed U.S. manufacturing data and fiscal stimulus. All sectors except industrials rose, with the S&P 500 and Nasdaq indices closing at record highs. The domestic stock market is expected to face upward pressure influenced by the overseas market's strength. Attention should be paid to differentiated phenomena by stock due to domestic economic indicators released before the market opens and vaccine optimism.

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