[Good Morning Stock Market] Relief on Weak US Employment Data... Domestic Market Also Expected to Rebound

US Stock Market Rebounds Over 1%
Tech Stocks Lead Amid Oversold Debate
Domestic Tech Stocks Expected to Rally

[Asia Economy Reporter Ji Yeon-jin] The U.S. stock market rose on the 2nd (local time) amid expectations that the Federal Reserve (Fed) would slow the pace of interest rate hikes due to weak employment data. The gains were further boosted by OPEC+ agreeing to increase oil production and a rally centered on technology stocks, which had been subject to overselling concerns. The Dow Jones Industrial Average rose 1.33%, the large-cap-focused Standard & Poor's (S&P) 500 index gained 1.84%, and the tech-heavy Nasdaq index jumped 2.69%. The domestic stock market is also expected to show strength, supported by the rise in U.S. stocks and economic stimulus measures announced the previous day by China for major cities.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = The U.S. stock market's strength, driven by Fed officials' mentions of inflation peaking and confidence in the economy, is positive for the Korean stock market. In particular, the news of additional production increases by OPEC+ raises expectations for a downward stabilization of international oil prices, which could ease high inflation concerns and lead to strength centered on technology stocks. Meanwhile, the weakening of the U.S. dollar increases the possibility of won appreciation, which could boost expectations for foreign investors' stable demand. Additionally, China's announcement of economic stabilization policies, which did not affect the Korean market the previous day, could further increase confidence in the economy and enhance expectations for stable foreign demand. Considering this, the Korean stock market is expected to start with about a 1% rise and continue its strength, supported by foreign demand.

The MSCI Korea Index ETF rose 1.46%, and the MSCI Emerging Markets Index ETF increased 1.72%. The 1-month NDF USD/KRW exchange rate was 1,241.60 won, reflecting an expected 11 won decline at the start of trading.

◆ Ji-young Han, Researcher at Kiwoom Securities = Although the U.S. stock market rebounded the previous day, daily volatility remains high, and economic indicators and Fed officials' remarks continue to cause market confusion. For example, May's ADP private employment was reported at 128,000, below the expected 240,000, which could reduce wage inflation pressure due to employment slowdown but also raises concerns about a recession. Additionally, Atlanta Fed President Raphael Bostic supports pausing rate hikes in September, while Vice Chair Lael Brainard emphasized that "there is no reason for the Fed to take a break due to inflation issues," showing continued divergence in views.

This reflects unresolved negative factors in the market, and volatility is expected to increase as market participants sort out these issues. However, as seen in the rebound of major global stock markets since the end of last month, the market appears to have largely priced in existing negative factors through price adjustments. Unless new unexpected negative factors emerge, the current index level is considered a zone for holding or buying rather than selling. Considering this, the Korean stock market, which had declined due to U.S.-originated negative factors during the domestic market holiday, is expected to rise today, supported by the U.S. market rebound, recognition of the market bottom, and expectations for solid corporate earnings confirmed in May exports. However, given the U.S. nonfarm payroll data for May scheduled for release tonight and the domestic market holiday on June 6, cautious sentiment may limit the market's upside during the session.

◆ Jeonghwan Na, Researcher at Cape Investment & Securities = The U.S. stock market continued its correction, and the 10-year Treasury yield rose amid the Fed's tightening measures, leading to a decline in the domestic stock market the previous day. Although the Shanghai lockdown was lifted on June 1, concerns about resurgence remain, and the European Union's ban on Russian energy imports has lowered the likelihood of peace negotiations between Russia and Western countries, maintaining anxiety about global supply-side inflation. As the KOSPI index approached a 12-month forward price-to-earnings ratio (PER) of around 10 times, investors took some short-term profits. The market remains unstable, with investors still not confident that the stock market will continue a sustained upward trend.

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