[Good Morning Stock Market] US Omicron Aftershocks Continue... Domestic Market Expects 'New Year Rally' Momentum

[Asia Economy Reporter Ji Yeon-jin] On the 29th (local time), the US stock market closed mixed, fluctuating within a narrow range while monitoring the impact of Omicron on the economy. The S&P 500 closed at 4,793.06, up 0.14% from the previous day, and the Dow Jones Industrial Average rose 0.25% to 36,488.63. Meanwhile, the Nasdaq fell 0.10% to 15,766.22. On the last trading day of the year, the 30th, the domestic stock market is expected to show a steady trend despite the burden from the weakness of US tech stocks due to profit-taking, buoyed by expectations of a New Year rally. In particular, the stock price movement of domestic bio stocks is attracting attention, as Biogen, a US pharmaceutical company, surged sharply on news that Samsung would acquire it the day before.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = Some retail sectors with solid sales during the year-end shopping season showed strength, but tech stocks fell due to increased profit-taking, continuing sector differentiation. Additionally, with trading volume decreasing ahead of the year-end, the Dow Jones Industrial Average rose for six consecutive days, supported by the strength of the year-end shopping season, which is also notable.

The MSCI Korea Index ETF rose 0.09%, the MSCI Emerging Markets Index ETF fell 0.45%, and the 1-month NDF USD/KRW exchange rate was 1,186.01 won, reflecting an expected 1 won decline at the start of trading. European Kospi 200 futures rose 0.11%, and the Kospi is expected to open slightly higher.

In the US stock market, retail sales sectors showed strength supported by the solid year-end shopping season, but the weakness of tech stocks due to profit-taking is a burden on the Korean stock market. Furthermore, indicators showing a sharp increase in safe assets in global institutional portfolios have also limited active market responses. The robustness of US year-end consumption raises expectations for increased Korean exports in the first half of next year, so a rebound buying trend is still expected. Considering this, the Korean stock market is expected to open slightly higher, and as it is the last trading day of 2021, buying interest is expected to flow in, driven by optimism about increased deferred US demand in January next year.

◆ Jiyoung Han, Researcher at Kiwoom Securities = Although the US stock market has generally risen recently, the upward momentum appears to be slowing over time. Looking at the S&P 500 index alone, it set a total of 70 new highs throughout 2021 and rose about 30% since the beginning of the year, indicating increasing pressure on speed and level. Since growth and tech stocks have driven the index rise, there is a possibility that profit-taking to digest high price concerns will continue, especially centered on these stocks in the short term. Nevertheless, the outlook for growth stocks supported by earnings growth, not just those with high valuations (or tech stocks), remains positive. Therefore, price adjustments due to profit-taking pressure in these stock groups should be approached as buying opportunities.

The domestic stock market, which showed relatively strong performance despite the ex-dividend effect on the previous trading day, is expected to maintain a steady price trend today, supported by expectations of a New Year rally. Due to the market closing day, overall trading may be sluggish, limiting the index's upside, so a differentiated market between sectors and stocks based on individual issues is expected. Considering that Biogen (+9.5%), a major US pharmaceutical company, surged on news of acquisition by Samsung in the previous US trading day, attention should be paid to whether such global M&A expectations will spread among domestic pharmaceutical and bio sectors. Market interest is expected to focus on stock price changes in the pharmaceutical and bio sectors due to Biogen-related factors.

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