[Good Morning Stock Market] US Stocks Close Higher Due to Supply and Demand Factors... "Limited Impact on KOSPI"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Myunghwan] The U.S. stock market closed higher on the 20th (local time) supported by supply and demand factors. On that day, the U.S. stock market started lower due to profit-taking following the previous day's gains and ongoing concerns over the Ukraine issue, which widened the fluctuations. However, with a significant increase in trading volume due to futures and options expiration and some position liquidations, the market rebounded on supply and demand factors. The Dow Jones Industrial Average and the Standard & Poor's (S&P) 500 index rose by 0.80% and 1.17%, respectively. The Nasdaq index, which is tech-heavy, increased by 2.05%. However, since the U.S. stock market rose due to supply and demand factors, the impact on the Korean stock market is expected to be limited.

Seosangyoung, Researcher at Mirae Asset Securities: "U.S. Market Rises Due to Supply and Demand Factors... Limited Impact on Domestic Market"

Although there was a summit meeting between U.S. President Joe Biden and Chinese President Xi Jinping, it ended with both sides confirming differences on several issues, weakening market expectations. The U.S.-China summit concluded without any agreement, only confirming differences, so careful attention should be paid to the possibility that the Ukraine crisis could escalate into a confrontation between the U.S. and Western countries and Russia and China. The remarks from Federal Reserve (Fed) officials on that day were mostly hawkish. Fed Governor Christopher Waller stated, "Economic data basically called for a 50 basis point rate hike, but due to geopolitical issues, I supported a 25 basis point increase," and advocated for an aggressive monetary policy, saying, "We need to have at least one 50 basis point hike at the upcoming meeting."

The fact that the U.S. stock market showed a strong gain of over 2%, especially in tech stocks, is positive for the domestic market. However, since this is a result of supply and demand factors despite various negative factors, the impact on the Korean stock market is expected to be limited. The uncertainty surrounding Ukraine and the Fed officials' aggressive monetary policy remarks have led to a stronger dollar, which could burden foreign investor supply and demand, which is negative. Considering this, the Korean stock market is expected to start with a rise of around 0.5%, but given the foreign investor supply and demand burden, a process of absorbing selling pressure is inevitable.

Han Jiyoung, Researcher at Kiwoom Securities: "Ukraine Crisis Stabilizes... Domestic Market to Show Upward Trend This Week"

This week, the Korean stock market is expected to show an upward trend influenced by remarks from key Fed officials, major countries' manufacturing Purchasing Managers' Index (PMI) data, and the progress of the Ukraine crisis. Since sensitivity to macro variables has decreased after the March Federal Open Market Committee (FOMC) meeting, the market is expected to show differentiated stock price movements across sectors depending on individual issues. The expected KOSPI range this week is 2650 to 2780 points.

Although there is no reversal in the Ukraine crisis situation, as inferred from the strong U.S. stock market on the 18th, the market seems to be gradually recognizing the crisis as a constant factor. Although there were clashes of opinion during the video conference between President Biden and President Xi, it is judged that they also prioritize finding a peaceful solution. The fact that major Fed officials are making hawkish remarks such as rate hikes to respond to inflation is also a burden. The scheduled remarks from key officials, including Fed Chair Jerome Powell, this week may also cause caution during the week.

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