[Good Morning Stock Market] US Tech Stocks Decline, Domestic Market Also Pressured... "Recent Declining Stocks See Rebound Buying"

[Asia Economy Reporter Ji Yeon-jin] The U.S. stock market closed mixed on the 23rd (local time). Continued sales centered on tech stocks, including Tesla, are expected to weigh on the Korean stock market. However, as rebound buying flowed in late in the session, cyclical stocks and those that had recently experienced significant declines are expected to see buying interest. The Dow Jones Industrial Average closed at 35,813.80, up 194.55 points (0.55%) from the previous session, the Standard & Poor's (S&P) 500 index rose 7.76 points (0.17%) to 4,690.70, while the tech-heavy Nasdaq index fell 79.62 points (0.50%) to 15,775.14.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = The U.S. stock market started mixed as it digested the news of Fed Chair Powell’s renomination, but the continued rise in Treasury yields led to sales centered on tech stocks, expanding the Nasdaq’s decline. Tesla plunged sharply due to delays in Cybertruck production, which further widened the Nasdaq’s losses, but late-session rebound buying helped reduce the decline. Notably, the strength in financial and energy sectors contributed to gains in the Dow and S&P 500 indices.

The continued sales pressure on tech stocks following the previous day is expected to weigh on the Korean stock market. In particular, the weakness in electric vehicle, secondary battery, and EV charging system-related stocks, as well as the continued weakness in metaverse-related stocks, are factors dampening investor sentiment. However, considering the limited fluctuations in the dollar compared to the previous day, the rise in international oil prices despite the release of strategic reserves, the strength in retail sectors ahead of the year-end shopping season, and the late-session rebound buying in the U.S. market, the Korean stock market is expected to start flat and show resilience, with rebound buying flowing into cyclical stocks and those that had recently experienced significant declines.

◆ Yujun Choi, Researcher at Shinhan Financial Investment = Korea’s vaccination completion rate is around 80%, ranking among the top globally, forming the basis for the With-Corona system. Despite the high vaccination rate, the spread accelerated mainly due to the highly transmissible Delta variant and waning antibodies among vaccinated individuals over time. The pace of booster shot administration will be key to the continuation of the With-Corona policy.

Although external activities have increased amid expectations for With-Corona, the stock market remains skeptical about its sustainability. The key variable lies not in the absolute speed of spread but in controlling severe cases. Authorities are discussing measures to temporarily halt the recovery of daily life if the epidemic situation worsens. As inconveniences increase, careful consideration is needed regarding the recovery path of reopening stocks.

◆ Yumi Kim, Researcher at Kiwoom Securities = The dollar experienced a slight decline amid a pause following its recent sharp rise, while the euro’s additional weakness was limited due to improved economic indicators. U.S. economic data showed mixed results: the November Markit Manufacturing PMI came in at 59.1, exceeding market expectations and the previous month’s figure, but the service PMI fell short of expectations. The euro showed slight strength against the dollar as both manufacturing and service PMIs in November outperformed market forecasts. The yen continued to weaken due to concerns over widening U.S.-Japan interest rate differentials amid rising U.S. Treasury yields. The 1-month NDF USD/KRW rate is expected to open at 1,191.05 won, up 1 won, but with the dollar’s strength easing, fluctuations are expected within a slightly weak range.

U.S. Treasury yields continued to rise as the market digested the news of Fed Chair Powell’s renomination. Concerns that the pace of monetary policy normalization could accelerate are driving the yield increases. The 10-year U.S. Treasury yield rose to around 1.68%, with long-term bonds leading the gains. International oil prices rose despite the resurgence of COVID-19 in Europe and announcements of strategic reserve releases by the U.S., China, India, and other countries. The announcement of strategic reserve releases by various countries also raised expectations that OPEC+ might adjust production paths, contributing to the rise in oil prices. Meanwhile, gold declined, closing near $1,800 per ounce, as the dollar showed slight weakness but the rise in the 10-year U.S. Treasury yield continued.

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