[Good Morning Stock Market] US Strong Earnings Lead 3 Major Indexes to Close Higher... KOSPI Sees Improved Large-Cap Stock Demand

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The U.S. stock market closed higher across all three major indices, buoyed by positive earnings reports from more than half of the S&P 500 companies that announced results, with 81% surpassing market expectations. The Dow Jones Industrial Average rose 1.9%, the Nasdaq increased 3.1%, and the S&P 500 gained 2.5%.

Notably, Apple, the world's largest company by market capitalization, reported an 8.6% year-over-year increase in revenue and net income that exceeded market forecasts after the market closed, leading to a more than 2% rise in after-hours trading. In contrast, Amazon announced its first quarterly loss since 2015 and fell nearly 9% in after-hours trading. This decline is attributed to significantly increased costs due to labor shortages and supply chain disruptions, as well as a valuation loss on its approximately 18% stake in electric vehicle manufacturer Rivian, which has plummeted over 65% this year.

The U.S. Department of Commerce reported that the country's first-quarter Gross Domestic Product (GDP) decreased by 1.4% year-over-year, falling short of the market expectation of a 1.0% decline. The economic contraction was influenced by a trade deficit and reduced inventory investment, with exports down 5.9% year-over-year and imports up 17.7%. Additionally, weekly new unemployment claims fell by 5,000 to 180,000, indicating a clear improvement in the labor market.

Amid growing investor doubts about growth, investors are focusing not only on first-quarter earnings but also on future guidance.

Kim Seok-hwan, Researcher at Mirae Asset Securities: "Supply and demand improvement centered on large-cap stocks... Korean stock market expected to start up around 0.5%"

On the 29th, the KOSPI is expected to start with an increase of around 0.5%. Supported by the strong U.S. stock market, which rose sharply for the first time in seven weeks due to robust corporate earnings, solid consumer spending, and strong employment, positive investor sentiment is expected to form in the domestic market as well. However, the ongoing strength of the U.S. dollar, which continues to push the won-dollar exchange rate higher (won depreciation), is likely to act as a barrier to foreign capital inflows. Ultimately, similar to the previous day, supply and demand centered on institutions is expected to flow mainly into large-cap stocks.

Samsung Electronics, which announced earnings the previous day, revealed in its conference call plans to significantly expand its foundry business over the next five years, which is expected to have a positive trickle-down effect on domestic semiconductor parts and equipment companies. The disclosure of the foundry order backlog size, which had not been previously revealed, can also be seen as a sign of confidence.

The Ministry of SMEs and Startups held a Small Business Adjustment Committee meeting the day before and issued a recommendation regarding Hyundai Motor and Kia's entry into the used car market. The recommendation includes a one-year grace period and a restriction on the number of used cars sold for two years after market entry. The companies plan to start a pilot project in January next year and begin selling certified used cars in May of the same year. This is expected to contribute as momentum for expanding their scale following the surprise earnings announcement in the first quarter.

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