[Good Morning Stock Market] US Stocks Volatile Amid Decline in Chinese Economic Indicators... KOSPI Expected to Start Flat

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myunghwan Lee] On the 16th (local time), the New York stock market closed mixed amid negative factors such as a decline in China's real economy indicators and volatility in the cryptocurrency market. Despite various adverse factors, attention was drawn to the fact that the indicator results were already anticipated, leading to a surge in bargain buying and a rebound from the lows. The Dow Jones Industrial Average rose 0.08% from the previous trading day, while the Nasdaq and S&P 500 indices fell 1.20% and 0.39%, respectively. The narrowing of the decline in the U.S. stock market despite negative factors is positive for the Korean stock market. On the 17th, the domestic stock market is expected to start flat and then attempt a rebound with a solid performance.

Sangyoung Seo, Head of Media Content Division at Mirae Asset Securities: "The domestic stock market will start flat and then show a solid performance."

On the 17th, the Korean stock market is expected to start flat and then show a solid performance. Despite the U.S. stock market highlighting concerns about a China-induced economic downturn, it has absorbed related issues, and the recent market theme of bargain buying sentiment has flowed in, leading to a reduction in intraday declines or a shift to gains, which is expected to have a positive impact. In particular, the forecast that the U.S. dollar will weaken and the Korean won will strengthen is also favorable.

Additionally, although China's economic indicators have sharply contracted, the easing of lockdowns in some areas such as Shanghai has begun, which is also positive. Especially, the fact that some investment banks like JP Morgan have upgraded their outlook on Chinese companies and that positive forecasts are flowing into the Chinese stock market is favorable, as there is a high intraday correlation with the Korean stock market.

It is also noteworthy that expectations for the Chinese government's active stimulus policies have increased. News of the phased easing of lockdowns in Shanghai and others has conveyed that the poor Chinese economic indicators are temporary, limiting the expansion of recession concerns. In the late U.S. session, the dollar weakened, and international oil prices turned upward. The stock market also stabilized, rising mainly in energy and pharmaceutical sectors.

Jiyoung Han, Researcher at Kiwoom Securities: "The decline in Chinese economic indicators is neutral... The domestic stock market will attempt a rebound."

On the 17th, the domestic stock market is expected to attempt a rebound, supported by the easing of the sharp rise in the dollar amid persistent inflation anxiety and economic slowdown concerns, despite being in an oversold condition. The real economy indicators of China released the previous day recorded a shock due to the impact of lockdown measures, which, following the previous trading day, could stimulate concerns about a China-induced economic cooling or recession in the domestic stock market. However, this has been largely reflected in stock prices, and from June, with the possibility of economic normalization centered on the Shanghai area and rising expectations for stimulus measures, it is judged that this will be limited to a neutral issue rather than a negative factor for the domestic stock market.

On the 16th, the U.S. stock market closed mixed amid a calming of panic selling but also profit-taking following a short-term surge the previous day and debates over economic slowdown. Concerns about economic slowdown increased due to shocks in China's real economy indicators such as retail sales and the U.S. May New York manufacturing index, raising caution about upcoming U.S. real economy indicators such as April retail sales and industrial production scheduled for release on the 17th (local time). While sectoral differentiation was observed, the S&P 500 closed slightly lower due to weakness in large tech stocks, semiconductors, and financial stocks.

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