[Good Morning Stock Market] Earnings Season Boosts US Market Optimism "Improved Korean Investor Sentiment... Expecting Rebound Attempt"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myunghwan Lee] On the 8th, the KOSPI is expected to show a solid performance after starting with gains due to the inflow of rebound buying. On the 7th (local time), the U.S. stock market opened lower again amid concerns over the Federal Reserve's (Fed) aggressive monetary policy. However, it closed higher, driven by rebound buying sentiment following recent consecutive declines, mainly in stocks expected to post strong earnings ahead of the earnings season. The shift in focus from the Ukraine crisis and Fed monetary policy to the earnings season is expected to positively influence overall investor sentiment.

Sangyoung Seo, Researcher at Mirae Asset Securities: "The shift to the U.S. earnings season is positive for the Korean stock market... KOSPI expected to start up about 0.3%"

Recently, the U.S. stock market declined amid concerns over economic slowdown due to the Ukraine war and the burden of the Fed's aggressive monetary policy. The possibility of continued aggressive rate hikes by the Fed tends to increase volatility, as seen by the widening intraday losses.

The rebound buying following recent declines in the U.S. stock market is favorable for the Korean stock market. Additionally, the Russian government's expectation to end the Ukraine war in the near future is also positive.

In particular, the shift in focus from the Fed's monetary policy and the Ukraine issue, which recently triggered market declines, to the U.S. earnings season is expected to improve overall investor sentiment. The recent upward revision trend in earnings estimates, which had been slowing, is a factor that can raise expectations for the earnings season. Considering this, the KOSPI is expected to start up about 0.3% and show a solid performance due to the inflow of rebound buying. However, anxiety remains, so sector differentiation rather than index movement is expected.

Jiyoung Han, Researcher at Kiwoom Securities: "U.S. stock market closed higher... rebound expected mainly in oversold stocks"

The U.S. stock market rebounded slightly after digesting selling pressure related to monetary policy concerns, including the release of the Fed minutes the previous day. Despite early improvement in weekly initial jobless claims, the S&P 500 index started down 0.1% due to ongoing tightening concerns, and losses widened to 0.7% following hawkish remarks from James Bullard, President of the St. Louis Fed. However, it closed higher in the afternoon, supported by bargain buying in major tech stocks and strength in sectors such as healthcare and consumer staples.

The domestic stock market is expected to rebound, led by oversold stocks, as it absorbs the shock from the Fed's tightening episodes. Although major companies like Samsung Electronics, LG Electronics, and LG Energy Solution reported first-quarter earnings surprises the previous day, their stock prices remained sluggish, which is believed to be due to macroeconomic uncertainties rather than company-specific risks. As major countries, led by the U.S., enter the full earnings season starting next week, market participants are expected to respond more sensitively to earnings issues rather than macroeconomic concerns. Given the strong earnings of companies like Samsung Electronics and the increased likelihood of upward revisions to overall earnings forecasts for the domestic market, the stock market's price resilience is expected to improve during April.

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