[Good Morning Stock Market] US Stock Market Hits All-Time High... Will KOSPI Also Surpass 3300?

[Image source=Yonhap News]

[Asia Economy Reporter Junho Hwang] Will the KOSPI's record-breaking streak continue on the 25th?

On the 24th, despite remarks from the Bank of Korea about interest rate hikes within the year and the spread of COVID-19 variants, the KOSPI showed an upward trend, drawing attention to whether it will surpass the 3300 mark for the first time ever on the 25th. On the 24th (local time) in the United States, news of an agreement on an infrastructure investment plan and dovish remarks from Federal Reserve (Fed) officials led the S&P 500 and Nasdaq to simultaneously hit all-time highs. The expanded investment sentiment toward U.S. risk assets is expected to have a positive impact on the domestic stock market as well.

On that day, the Dow Jones Industrial Average rose 322.58 points (0.95%) to close at 34,196.82, the S&P 500 increased by 24.65 points (0.58%) to 4,266.49, and the Nasdaq climbed 97.98 points (0.69%) to finish at 14,369.71. Both the S&P and Nasdaq surpassed their previous all-time highs that day.

News that President Joe Biden and senators reached an agreement on a $1 trillion infrastructure investment plan boosted the stock market. After the infrastructure investment agreement, the U.S. 10-year Treasury yield stabilized at 1.495%, slightly up from the previous day.

Remarks from Fed officials also had a positive effect. On that day, John Williams, President of the New York Federal Reserve Bank, said it was not yet time to raise interest rates because employment still falls short of the level the central bank desires. Patrick Harker, President of the Philadelphia Fed, assessed that the U.S. economy is currently in very good shape, having nearly recovered the GDP losses from last year, but employment remains significantly reduced.

The increased preference of U.S. investors for risk assets is expected to influence the domestic stock market as well. Ji-young Han, a research analyst in charge of strategic market conditions at Kiwoom Securities, stated, "The Korean stock market is expected to attempt new highs as it digests Fed policy uncertainties and renewed expectations for infrastructure investment under the Biden administration improve risk asset preference."

Sang-young Seo, a researcher at Mirae Asset Securities Media Content Division, explained, "The KOSPI has a high possibility of challenging the 3300 mark on this day," adding, "This is because the infrastructure investment expectations that led the U.S. stock market's rise can be expected to strengthen related stocks such as industrials and 5G."

However, he noted, "The fact that central banks around the world continue to mention liquidity reduction is a burden," and predicted, "Considering this, after challenging 3300, if it surpasses this level, profit-taking selling is likely to emerge."

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