[Good Morning Stock Market] US Stocks Rise for Two Consecutive Days... Will the Korean Stock Market Follow?

US 3 Major Indexes Rise Around 1%... Relief Over Federal Government Debt Ceiling Negotiations
Positive Impact on Domestic Stock Market... "Need to Monitor Post-Holiday Trends in Chinese Stock Market"

On the 4th (local time), pedestrians are passing in front of the New York Stock Exchange building in Manhattan, New York City, USA. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The New York stock market closed higher for the second consecutive day. The market breathed a sigh of relief following a temporary increase agreement on the U.S. federal government's debt ceiling. However, concerns that the Federal Reserve's (Fed) tapering (reduction of asset purchases) could proceed rapidly led to a decrease in the gains, which is expected to weigh on the domestic stock market as well. The direction of the Chinese stock market, reopening after the holiday, is also anticipated to be a significant variable for the domestic market.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities= Following Senate Republican Leader Mitch McConnell's announcement to suspend the debt ceiling until December, Senate Democratic Leader Chuck Schumer announced an agreement with the Republicans to extend the debt ceiling by $480 billion until early December, which acted as a positive factor.

The news of a U.S.-China summit to be held within the year also had a positive effect. Local foreign media reported that Jake Sullivan, U.S. National Security Advisor, and Yang Jiechi, Chinese Politburo member in charge of foreign affairs, agreed during their meeting to hold a summit between the two countries' leaders this year. However, concerns that the Fed might accelerate tapering due to employment improvements caused some of the gains to be given back.

This influence is expected to affect the domestic stock market as well. Summarizing recent statements from Fed officials, it is notable that while the inflation target has been achieved, employment still requires attention. The newly released initial jobless claims decreased, and particularly, the continuing claims dropped significantly from 2.811 million to 2.714 million, indicating clear employment improvement. The employment report to be released on Friday, Korean time, is also expected to show favorable results such as non-farm payrolls. This could accelerate the Fed's tapering pace, posing a burden on the domestic stock market.

Attention should also be paid to Samsung Electronics' earnings announcement. The market currently expects operating profit to be around 16 trillion won. Since there are concerns about the earnings peak, the market reaction after the announcement will be important. Despite the domestic stock market rebound the previous day, the won-dollar exchange rate remained in the 1190 won range, indicating limited won strength, which is also a burden. However, if the Chinese stock market shows a solid performance after the holiday, the domestic market's gains could expand.

◆ Namjoong Moon, Researcher at Daishin Securities= The key to overcoming the uncertainty in the October stock market lies in U.S. 'policy.' Since the variable that led to a turnaround in the U.S. stock market (S&P 500), which had fallen 5.2% from its peak, was the possibility of a debt ceiling suspension, if either the debt ceiling suspension bill or the infrastructure investment bill resolves its complications, the stock market is likely to gradually regain calm.

Inflation concerns remain a variable to watch in the fourth quarter. The U.S. consumer price index for September, to be released on the 13th, will be an important gauge. If it rises compared to the previous month, it could superficially stimulate inflation worries. However, since last month saw increased supply chain disruptions due to the spread of the Delta variant causing production setbacks and logistics delays, if the figures do not vary significantly from the levels of July and August, it is expected to contribute to the stock market regaining calm in October.

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