[Good Morning Stock Market] "US Stock Market Rebound and Earnings Expectations... Korean Stock Market Expected to Start Slightly Higher"

[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jaehee] On the 26th, the Korean stock market is expected to start with a slight rise. The U.S. stock market opened lower amid growing concerns over a global economic slowdown due to China's economic lockdowns. In particular, fears of 'stagflation'?high inflation combined with economic slowdown?seemed to affect investor sentiment. However, a rebound buying momentum continued during the session, leading the Nasdaq to successfully recover. This is expected to have a positive impact on the Korean stock market as well. On the day, all three major indices in the New York stock market closed higher. The Dow Jones rose 0.7%, Nasdaq 1.29%, and S&P 500 0.57%.

Notably, Apple's turnaround in the Nasdaq stood out. Apple had fallen more than 2% at one point due to concerns over Foxconn factory production halts caused by China's economic lockdown and a slowdown in iPhone shipments in the first quarter. However, with rising expectations ahead of Apple's earnings announcement on the 28th, it successfully turned upward. Following this, most component stocks such as Qualcomm (2.82%), Skyworks (2.42%), and Qorvo (2.61%) showed strength. Additionally, Snowflake (7.56%), a cloud data company, rose due to increased sales in the cloud industry and eased valuation pressure following recent declines. Microsoft (2.44%), Alphabet (2.87%), and Amazon (1.19%), all set to announce earnings soon, also showed strength amid expectations of increased sales to data centers. Twitter (5.66%) rose after approving Elon Musk's acquisition (M&A) proposal during the session before its earnings announcement.

Seosangyoung, Mirae Asset Securities Researcher: "Limited Rise Expected Amid Rebound Buying Inflow"

On the 26th, the Korean stock market is expected to start with an increase of around 0.5%. The previous day, the Korean stock market fell due to concerns over aggressive tightening by the Federal Reserve (Fed). Additionally, the Chinese government's expansion and extension of COVID-related economic lockdowns weighed on investor sentiment. As a result, the won-dollar exchange rate rose nearly 11 won to 1,249.90, and foreign investors' net selling expanded, adding to supply-demand pressures.

Meanwhile, although the U.S. stock market fell due to Fed tightening and concerns over a China-driven economic slowdown, a rebound was seen late in the session as large tech stocks awaiting earnings announcements attracted buying interest. This is positive for the Korean stock market. In particular, the recent decline has eased valuation pressures, highlighting bargain-hunting sentiment. Of course, concerns over Fed tightening due to high inflation and global economic slowdown due to China's lockdowns have not eased, but heightened expectations for major companies' earnings are positive.

Although the Chinese stock market plunged the previous day, Chinese companies listed on the U.S. stock market such as JD.com, Pinduoduo, and Baidu showed strength, indicating high expectations for the Chinese stock market today, which is also favorable. Furthermore, the People's Bank of China expressed a strong commitment to stabilizing the financial market by cutting the reserve requirement ratio by 100 basis points to curb yuan depreciation. Considering this, the Korean stock market is expected to start with a rise of around 0.5% and show resilience driven by optimism about the earnings season.

Han Jiyoung, Kiwoom Securities Researcher: "Relief from U.S. Technical Rebound... Korean Market to Join the Rally"

Since the panic-selling-driven sharp decline in the latter half of last week, investor sentiment has been extremely subdued, so the technical rebound is a relief factor. However, the probability of a 75 basis point rate hike at the June FOMC approaching 80% is expected to weigh on the market. The fact that Fed officials have entered a blackout period, during which public comments are prohibited, is also seen as a factor that could further increase market uncertainty during the week.

However, given the downward trajectory of economic growth through the end of the year, a 75 basis point hike is reportedly a policy burden even within the Fed. Furthermore, considering that most commodity prices such as crude oil and wheat have returned to levels seen earlier this year?except for some items like natural gas and corn?if the April U.S. consumer price index confirms an inflation peak, the Fed's tightening intensity after June or in the second half of the year may not be as severe as currently feared by the market.

Therefore, on the 26th, the Korean stock market is also expected to rebound, supported by the strong U.S. stock market amid perceptions of excessive prior declines. Although the previous day's plunge in the Chinese stock market, driven by concerns over capital outflows and lockdown measures, added to instability across Asian markets, the Chinese foreign exchange authorities' sudden 100 basis point cut in the foreign exchange reserve requirement ratio to defend the yuan exchange rate is helping to ease anxiety in Asian markets including China. Additionally, despite external negative factors such as the Ukraine crisis and supply shortages, major companies like Hyundai Motor and Kia Motors have reported consecutive strong earnings, which is also expected to support the Korean stock market's rebound during the solid first-quarter earnings season.

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