[Good Morning Stock Market] Korean Stock Market Expected to Start Slightly Up... "Individual Stocks Market Continues"

[Asia Economy Reporter Park Jihwan] The U.S. New York stock market closed higher, buoyed by earnings surprises from major companies. On the 28th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 35,730.48, up 239.79 points (0.68%) from the previous day. The Standard & Poor's (S&P) 500 index rose 44.74 points (0.98%) to 4,596.42, and the tech-heavy Nasdaq index gained 212.28 points (1.39%) to 15,448.12. Both the Nasdaq and S&P 500 indices set new all-time highs.

Market experts expect the positive impact of the U.S. stock market's rise due to strong earnings to also have a favorable effect domestically. As the third-quarter earnings season officially begins, it is anticipated that stock-specific trends based on earnings performance will continue for the time being.

◆ Seo Sang-young, Researcher at Mirae Asset Securities = The U.S. stock market expanded its gains as solid corporate earnings and rising expectations for the Biden administration’s social spending bill boosted sentiment. This is expected to have a positive impact on the Korean stock market. Although the U.S. third-quarter GDP growth rate slowed, optimism for the fourth quarter and improvements in employment indicators have prevented concerns about an economic slowdown from spreading, which is also favorable.

However, the lack of continuity, as some stocks that surged sharply the previous day showed weakness today, is a concern. Ultimately, market participants tend to seek short-term positive catalysts rather than actively investing in risky assets. In the Korean stock market as well, profit-taking from stocks that surged the previous day cannot be ruled out, so the concentration of stocks is likely to persist.

After the U.S. market closed, Amazon, which highlighted cost increases due to supply chain issues, fell on disappointing earnings, indicating that supply chain problems continue to be a burden. Apple also fell more than 5% in after-hours trading due to weak sales amid rising costs from supply chain issues, which is another concern. Considering this, the Korean stock market is expected to start with a slight rise, followed by continued concentration in individual stocks.

◆ Lee Jae-sun, Researcher at Hana Financial Investment = The domestic stock market is expected to continue a differentiated market by company for the time being. The surprise earnings announcements from U.S. companies in the third quarter are acting as a favorable factor for the market. The recent consecutive record rallies of the three major U.S. indices are based on solid earnings. Despite debates about a peak in the economic cycle, the third-quarter earnings confirmed that U.S. companies’ ability to pass on costs was higher than market expectations. According to Bank of America (BoFA), excluding the financial sector, the net margin (the proportion of net profit to sales) of U.S. companies that have reported third-quarter earnings so far was 12.4%, showing a clear improvement from 10.2% in the previous quarter.

◆ Han Ji-young, Researcher at Kiwoom Securities = The Nasdaq set a new high in the previous trading day in the U.S. stock market, and the earnings season optimism continues due to consecutive strong results from major companies such as Ford and Merck. However, the fact that Apple and Amazon, which announced earnings after the market closed, showed weaker-than-expected results and guidance, causing their shares to plunge more than 5% in after-hours trading, is a concern.

The domestic stock market is also expected to continue a differentiated market based on individual earnings, with limited upside for the index. A key point to watch in the domestic market is whether the concentration in sectors including semiconductors, such as Samsung Electronics and SK Hynix, will continue following the previous trading day. Of course, the recent bottoming out of stock prices in these sectors, centered on semiconductors, also reflects growing expectations for an improvement in the industry outlook.

Some voices have raised concerns about capital outflows from previously popular thematic stocks such as metaverse, eco-friendly, and NFT if the concentration in these sectors continues. Therefore, attention should be paid to the increased volatility in the stock prices of these thematic stocks.

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