[Good Morning Stock Market] KOSPI Expected to Start Lower Amid Weakness in US Tech Stocks... "Effective to Focus on Earnings Improvement Stocks"

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] Overnight, technology stocks on the U.S. New York Stock Exchange showed weakness as rising interest rate concerns dampened investor sentiment. Market experts predicted that the domestic stock market would also show a weak trend influenced by the decline in U.S. tech stocks. However, unlike U.S. growth stocks which face high peak pressure, domestic growth stocks do not carry significant price burdens, so volatility expansion is expected to be limited. In particular, since the domestic market is expected to remain sluggish for the time being, advice has emerged to establish a buying strategy focused on earnings-promising stocks.

Overnight, major indices on the New York Stock Exchange closed mixed. The Dow Jones Industrial Average continued its upward trend, hitting an all-time high, but the S&P 500 and Nasdaq indices showed weakness due to declines in technology stocks. On the 4th (local time), the Dow Jones Industrial Average closed at 36,799.65, up 214.59 points (0.59%) from the previous session. The Standard & Poor's (S&P) 500 index fell 3.02 points (0.06%) to 4,793.54, and the tech-heavy Nasdaq index closed down 210.08 points (1.33%) at 15,622.72.

In particular, as U.S. market interest rates rose, the weakness of high-valuation technology stocks was prominent. Tesla fell 4.18% that day, and Apple, which had reached a market capitalization of $3 trillion in the previous session, dropped 1.27%. Nvidia, which had led gains in semiconductor stocks, declined 2.76%.

◆ Seo Sangyoung, Researcher at Mirae Asset Securities = The KOSPI is expected to start slightly lower. The Korean stock market initially rose early in the session the previous day, but concerns over the Fed's hawkish stance caused the won-dollar exchange rate to continue rising, which acted as a burden. As foreign investors expanded their futures selling, the supply of shares mainly from financial investment sectors became a burden.

The continued rise in interest rates in the U.S. stock market, which persisted from the previous day, led to valuation concerns, resulting in selling pressure mainly on technology stocks such as semiconductors and software, which is a burden on the Korean stock market. Additionally, the slowdown in new orders in the U.S. ISM manufacturing index and the sluggishness of leading indicators for Korean exports are also burdens.

However, despite the explosive surge in new COVID-19 cases in the U.S., the WHO announced that Omicron causes relatively mild symptoms compared to previous variants, which is positive. This raises expectations that lockdowns will not expand and boosts confidence in the economy. Furthermore, considering the easing of supply chain concerns as reflected in the detailed items of the ISM manufacturing index, attention should be paid to sectors such as steel, non-ferrous metals, industrial goods, and machinery. Due to these changing factors, although the Korean stock market is expected to start lower, it is forecasted to show resilience centered on stocks with high earnings improvement expectations and those expected to benefit from eased supply chain concerns.

◆ Han Jiyoung, Researcher at Kiwoom Securities = The domestic stock market is expected to face downward pressure due to rising market interest rates and a strong dollar. However, expectations for economic recovery and forecasts of easing U.S.-origin supply shortages are expected to provide downside rigidity to the index.

Also, since U.S. growth stocks experienced a sharp decline, investment sentiment toward growth stocks in the domestic market is expected to weaken today. However, while U.S. growth stocks faced significant profit-taking pressure due to peak concerns, domestic growth stocks do not have a large peak burden. Furthermore, considering that domestic stocks already experienced a sharp price drop in the previous trading day, it is necessary to avoid responding with excessive anxiety and selling.

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