[Good Morning Market] 'Amazon Effect' Driving US Stock Rise... "Domestic Market Faces Pressure Factors"

[Asia Economy Reporter Ji Yeon-jin] Last weekend, the U.S. stock market closed mixed amid the Amazon effect and a surge in Bitcoin, alongside concerns over the Federal Reserve's (Fed) monetary policy. The Nasdaq, focused on tech stocks, and the large-cap S&P 500 rose, while the Dow Jones Industrial Average ended lower. On the 7th, the domestic stock market is expected to face headwinds as favorable U.S. employment data released over the weekend and the Amazon effect may turn into a counterforce.

◆ Seo Sang-young, Researcher at Mirae Asset Securities = Amazon surged 13.5% after reporting solid earnings driven by one-time profits, growth in data center and advertising sales, and Prime price increases. Bitcoin soared following news that the U.S. Congress is pushing a bill to exempt small cryptocurrency transactions from taxes, which boosted Tesla (3.61%) and related stocks such as MicroStrategy (+15.16%) and Coinbase (+7.24%). The MSCI Korea Index ETF rose 1.03%, the MSCI Emerging Markets Index ETF increased 0.15%, and the 1-month NDF USD/KRW rate stood at 1199.38 won, suggesting a 1 won rise at the opening of the USD/KRW exchange rate reflecting this.

Although the Nasdaq showed strength due to Amazon's surge, most other stock groups declined except for some individual stocks, which poses a burden on the Korean stock market. Particularly, the U.S. January employment report exceeded expectations, and hourly wages surged, accelerating the Fed's rate hike pace, which is also a concern. The Korean stock market is expected to open down about 0.5%, with key variables including remarks from Christine Lagarde, President of the European Central Bank (ECB), and the U.S. Consumer Price Index on the day.

◆ Seo Jeong-hoon, Researcher at Samsung Securities = The U.S. January employment data exceeded market expectations. The Labor Department reported a 467,000 increase in nonfarm payrolls from the previous month, far surpassing the market forecast of 125,000. Average hourly wages also rose 0.7% month-on-month, exceeding the expected 0.5%. Some analysts interpret this employment surprise as a statistical adjustment effect by the U.S. Labor Department. Removing the effects of population and seasonal adjustments applied from this report suggests the actual increase may not be as large.

By sector, consumer discretionary, which includes Amazon, rose 3.7%, recording the largest gain. Financials, energy, and IT showed relative strength next. Conversely, materials, real estate, and consumer staples closed weaker. The domestic market is also building resilience against tightening. An approach focused on large-cap stocks that have fallen excessively remains valid.

◆ Kim Yumi, Researcher at Kiwoom Securities = The U.S. dollar strengthened as short-term Treasury yields rose following the strong U.S. employment report. However, the euro remained firm, limiting the dollar's gains. The U.S. January employment report exceeded market expectations, with nonfarm payrolls increasing by 467,000 and upward revisions to November and December figures. Although the unemployment rate rose slightly, the labor force participation rate improved, indicating qualitative strength. The employment strength led to rising U.S. Treasury yields and expectations of intensified Fed tightening, supporting the dollar.

International oil prices continued to rise amid concerns over production disruptions. Tensions between Russia and Ukraine persist, and heavy snowfall in the U.S. Midwest raised concerns about U.S. crude oil production disruptions. Supply shortage worries in the oil market intensified, pushing prices up by over 2% compared to the previous day. Ahead of the U.S. January inflation data release this week, inflation hedge demand appears to have flowed in.

◆ Kim Dae-jun, Researcher at Korea Investment & Securities = A peculiar phenomenon was observed in the U.S. stock market. Despite soaring market interest rates, the Nasdaq index closed higher. Typically, rising rates negatively affect the Nasdaq, which is sensitive to discount rates, but this time it did not. Investors need to interpret this result carefully. Judgments on high-value stocks will be particularly important. If rising rates are a concern, selling high-value stocks could be considered from an investment perspective. Conversely, the Nasdaq's strength suggests buying high-value stocks might be possible. However, selling high-value stocks is considered more advantageous. Of course, one condition is necessary to take action: earnings visibility. In other words, high-value stocks without secured earnings should reduce their weight.

This will certainly be confirmed in the domestic market as well. High-value stocks with strong profitability will see their prices rise, while low-value stocks without earnings will show weakness. Regarding the recently reported Q4 earnings surprises, sectors expected to see profit growth will attract investor attention. Currently, these include semiconductors, hardware, banking, and insurance.

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