[Good Morning Stock Market] US Senate Operational Agreement... Positive for Korean Stock Market

On the 2nd, dealers were busy working in the dealing room of Hana Bank in Euljiro, Seoul. On this day, the KOSPI index started at 3,065.56, up 9.03 points (0.30%) from the previous trading day, showing an upward trend. Photo by Moon Honam munonam@

[Asia Economy Reporter Junho Hwang] While the Korean stock market closed higher the previous day, the U.S. stock market closed mixed on the 3rd (local time). There was optimism due to solid employment data and the Senate operating rules agreement, which is expected to accelerate policy implementation by the Joe Biden administration. However, concerns remained that the stimulus package might be scaled back, as indicated by the record-high service sector index. On that day, the Dow rose 0.12%, the S&P 500 increased by 0.10%, while the Nasdaq closed down 0.02%.

Sangyoung Seo, Kiwoom Securities Researcher, on U.S. Senate Operating Rules Agreement

On the 2nd, dealers were busy working in the dealing room of Hana Bank in Euljiro, Seoul. On this day, the KOSPI index started at 3,065.56, up 9.03 points (0.30%) from the previous trading day, showing an upward trend. Photo by Moon Honam munonam@

First, nonfarm payrolls shifted from a decrease of 78,000 last month to an increase of 174,000. This appears to be due to the service sector turning from a decrease of 73,000 to an increase of 156,000. Large companies with over 500 employees changed from a decrease of 109,000 to an increase of 39,000. Mid-sized companies with fewer than 500 employees also showed an increase of 84,000 following the previous month's 43,000, demonstrating the effect of the stimulus package.

The ISM service sector index also improved to 58.7 from 57.7 the previous month, marking the highest level since February 2019. This is attributed to significant improvements in the new orders and employment indices. This supports the Republican argument that economic recovery is possible even with a $900 billion stimulus package, increasing the likelihood of a reduction in additional stimulus measures.

Additionally, the Senate had been delayed in negotiating normal operating rules due to a 50:50 split in seats, but with the agreement reached on the Senate operating rules that day, the Democrats gained control. Senator Bernie Sanders, appointed as the Budget Committee chairman, announced reconciliation powers, enabling the Democrats alone to approve an additional $1.9 trillion stimulus bill. However, there was also a view that regulatory tightening could accelerate, which contributed to selling pressure in the latter part of the trading session.

Sangyoung Seo, Kiwoom Securities researcher, stated, "The agreement on the U.S. Senate operating rules has raised expectations for fiscal expansion, which is expected to have a positive impact on the Korean stock market today."

Yumi Kim, Kiwoom Securities Economist, on Bullard's Remarks Leading to Slight Dollar Weakness

On the 2nd, dealers were busy working in the dealing room of Hana Bank in Euljiro, Seoul. On this day, the KOSPI index started at 3,065.56, up 9.03 points (0.30%) from the previous trading day, showing an upward trend. Photo by Moon Honam munonam@

On that day, the U.S. dollar maintained a solid level as U.S. economic indicators exceeded expectations but closed slightly weaker following dovish remarks by James Bullard, President of the Federal Reserve Bank of St. Louis. The 1-month dollar/ won exchange rate is expected to start at 1,113.59 won, down 2 won. However, it is forecasted to fluctuate within a narrow range without showing a clear directional trend.

International oil prices rose following the announcement at the OPEC+ ministerial meeting that the January production cut compliance rate reached 101%. The decline in U.S. crude oil inventories also contributed to the rise in oil prices. On that day, March delivery West Texas Intermediate (WTI) crude oil on the New York Mercantile Exchange (NYMEX) closed at $55.69 per barrel, up 1.7% ($0.93) from the previous day.

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