[Good Morning Stock Market] US Market Without Leading Stocks... Mixed Close Amid COVID-19 Spread

Korean Stock Market Large Caps Expected to Pause... Differentiated Trends Anticipated by Stock

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The U.S. stock market closed mixed amid concerns over the spread of the COVID-19 Delta variant. With no clear market leaders, sectoral differentiation was observed. The domestic stock market is also expected to experience a pause in large-cap stocks due to concerns over weakened Chinese demand caused by the Delta variant and inflationary caution.

On the 9th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 35,101.85, down 0.3% from the previous trading day. The S&P 500 also closed down 0.09% at 4,432.35. Only the tech-heavy Nasdaq index ended the day up 0.16% at 14,860.18.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = In the U.S., the July nonfarm payrolls released last week exceeded expectations, and the July job openings announced on this day reached a record high of 10.073 million, indicating continued improvement in employment. The Conference Board's employment trends index for July, a leading indicator of employment, also improved to 109.80 from the previous release, suggesting that job growth may accelerate in the coming months.

Such favorable employment data led to a rise in U.S. Treasury yields. Additionally, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, stated that the Federal Reserve (Fed) could begin tapering (reducing asset purchases) as early as October, citing optimistic employment figures. He also mentioned that interest rate hikes could start by the end of next year if economic improvements continue. Consequently, Treasury yields rose and financial stocks maintained their strength.

Meanwhile, Senate Majority Leader Chuck Schumer announced that a $1 trillion bipartisan infrastructure bill would pass. Furthermore, he claimed that a $3.5 trillion social spending plan would also pass through a reconciliation process without Republican support next month. These remarks triggered reactions in infrastructure-related stocks, solar energy, and electric vehicle charging themes.

It is important to note the sectoral differentiation in the U.S. stock market amid the absence of clear market leaders. Overall, the market remains confident in the economy due to improved employment data but is cautious about the slowing pace of economic recovery caused by the spread of the COVID-19 Delta variant, resulting in a lack of aggressive responses. As mentioned by Atlanta Fed President Bostic and Richmond Fed President Thomas Barkin, the tapering issue has come to the forefront as employment improvements become more evident. However, with the U.S. Senate vote on the infrastructure investment bill approaching, the possibility of investment sentiment weakening is low. Considering this, the domestic stock market is expected to fluctuate according to individual stock movements rather than expanding gains after an initial rise of around 0.5%.

◆ Jiyoung Han, Researcher at Kiwoom Securities = Given the pressure on index levels in the U.S. stock market, it is necessary to be cautious as existing risk factors such as the Delta variant, inflation, and early tapering could exert downward pressure for the time being. Nevertheless, the economic fundamentals and corporate earnings have not been impaired, and additional upward momentum remains from infrastructure investments currently being negotiated in Congress, suggesting potential for further index gains through the end of the year.

The domestic stock market is expected to experience a pause mainly in large-cap stocks due to concerns over weakened Chinese demand caused by the COVID-19 Delta variant and inflationary caution. Considering the significant retracement in KakaoBank’s stock price in the latter part of the previous trading day, it is anticipated that there will not be a strong concentration of demand today. Although the resolution of such concentration could lead to the emergence of specific leading sectors from the outflow of funds, the possibility is considered low given the prevailing macroeconomic uncertainties. However, as expectations for large corporations’ investments and mergers and acquisitions (M&A) resurface, differentiated stock price movements are expected among sectors and stocks, particularly in small and mid-cap stocks related to the semiconductor value chain.

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