[Good Morning Stock Market] US Stocks Rebound Sharply on Buyback Demand... KOSPI Expected to Start Higher

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myung-hwan Lee] On the 13th (local time), the New York stock market closed with a sharp rebound as a rebound buying trend emerged following recent declines. The Nasdaq index rose 3.82%, marking its highest increase in about 1 year and 6 months since November 2020. The Dow Jones Industrial Average and the S&P 500 also jumped 1.47% and 2.39%, respectively. The significant rise in the U.S. stock market in the previous trading session is expected to have a positive effect on the Korean stock market, which is anticipated to start higher on the 16th.

Sang-young Seo, Head of Media Content Division at Mirae Asset Securities: "The domestic stock market is expected to start with an increase of around 0.7%"

On the 13th, the U.S. stock market started higher as rebound buying emerged following recent declines. In particular, Federal Reserve Chairman Jerome Powell’s indication of excluding a 75 basis point rate hike was a factor supporting early gains. The stabilization of the cryptocurrency market, which had been one of the recent decline factors, also positively influenced the sharp rise in related stocks.

The U.S. stock market’s rise due to expanding rebound buying sentiment is favorable for the Korean stock market. Notably, Micron’s Investor Day event highlighted rapid growth in the data center industry, driving the Philadelphia Semiconductor Index up 5.06%, which led the U.S. market. Additionally, the University of Michigan’s 12-month inflation forecast remained steady at 5.4%, indicating stabilization, which is also positive.

Considering that some of these factors were partially reflected in the Korean stock market on the 13th, the rise in the Korean market is expected to be limited. However, with China’s real economy indicators, to be announced on the 16th, expected to be lower than last month, expectations for China’s recently introduced economic stimulus policies may increase, supporting a solid market performance. Taking this into account, the domestic stock market is expected to start with an increase of around 0.7% and maintain strength depending on the results of China’s industrial production, retail sales, and other real economy indicators.

Ji-young Han, Researcher at Kiwoom Securities: "Entry attractiveness has increased, domestic stock market will recover... KOSPI band 2550~2680"

The domestic stock market is expected to recover influenced by factors such as ▲whether inflation anxiety eases ▲major real economy indicators from the U.S. and China like retail sales and industrial production ▲statements from Federal Reserve officials ▲and stabilization of the won-dollar exchange rate. The weekly expected KOSPI range is between 2550 and 2680 points.

It is also important to note that while the price-to-earnings ratio (PER) of the KOSPI has fallen about 13% since the beginning of this year, the operating profit forecast has risen by about 8%, increasing valuation attractiveness. Although it will take time for the index’s upper range to open significantly due to macro uncertainties, the current phase is expected to induce price recovery in the domestic stock market as entry attractiveness is higher than liquidation from both price and valuation perspectives.

On the 13th, the U.S. stock market rebounded mainly led by the Nasdaq, calming the panic-selling type plunge. However, since the buying was largely technical, driven by the perception that the decline was excessive, it is premature to consider the situation resolved. Market participants’ sentiment remains fragile, and Fed Chairman Powell also expressed reduced confidence compared to the May Federal Open Market Committee (FOMC) press conference, mentioning the difficulty of achieving a soft landing during the rate hike process. The Philadelphia Federal Reserve Bank President also emphasized rapid rate hikes if inflation is not controlled by September, indicating that the inflation issue is unlikely to be resolved in the short term.

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