[Good Morning Stock Market] Korean Stock Market Enters November FOMC Influence Zone... Expectations for US Stock Market Rise Impact

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jaehee] On the 31st, the domestic stock market is expected to start with a rise of around 1%. This is likely influenced by the New York stock market, where all three major indices closed higher, supported by the stock price increases of Apple and Intel. Additionally, with the U.S. Federal Reserve (Fed) nearing the end of its interest rate hikes, the likelihood of continued dollar strength is low, which is expected to positively impact investor sentiment.

The New York stock market opened mixed and flat, showing weakness due to earnings reports from major tech companies including Amazon, but closed higher as market participants commented that the dollar strength had a significant impact on earnings, and excluding that effect, earnings had greatly improved. On the 29th (local time), the Dow Jones Industrial Average closed at 32,861.80, up 2.59% (828.52 points) from the previous session. The Standard & Poor's (S&P) 500 index rose 2.46% (93.76 points) to 3,901.06, and the tech-heavy Nasdaq index closed at 11,102.45, up 2.87% (309.78 points).

In recent days, earnings from major tech companies had weighed on stock prices, but on this day, strong earnings from Apple and Intel led to significant gains in related stocks, improving market sentiment. The New York stock market opened mixed and flat due to weak earnings from major tech stocks including Amazon (-6.80%), but gains widened after Amazon and Apple CEO Tim Cook stated that excluding currency effects, the companies would have achieved double-digit growth. Particularly, major tech stocks like Microsoft (4.02%) and Alphabet (4.30%), which had fallen sharply after earnings announcements, surged strongly. Amazon, which initially dropped nearly 12% due to disappointing earnings, surged after reporting better-than-expected results and news of ongoing cost reductions. Meanwhile, although the semiconductor industry may see an expanded contraction in the fourth quarter, analysis suggesting the industry is nearing a bottom also had a positive effect. On this news, semiconductor stocks such as Nvidia (4.99%), AMD (5.82%), Qualcomm (3.93%), and Micron (3.50%) surged, pushing the Philadelphia Semiconductor Index up 3.98%.

◆ Seo Sangyoung, Head of Media Content Division at Mirae Asset Securities: "Rebound buying due to excessive decline in U.S. stock market and surge in Philadelphia Semiconductor Index... KOSPI expected to start with around 1.5% rise"

[Image source=AP Yonhap News]

Last Friday (28th), the Korean stock market showed weakness as investment sentiment shrank amid increased volatility caused by the U.S. stock market decline due to weak tech earnings. Particularly, the impact of Amazon's disappointing earnings after the U.S. market close further dampened investor sentiment. Additionally, news that the U.S. semiconductor subsidy bill could negatively affect the Asian semiconductor industry and concerns over a new chicken game led to a sharp drop in semiconductor-related stocks, which also had an adverse effect. As a result, the KOSPI closed down 0.89%, and the KOSDAQ fell 1.07%.

Meanwhile, despite a sharp rise in U.S. Treasury yields, the recent rebound buying in large tech stocks that had been declining is expected to positively influence the Korean stock market. In particular, the semiconductor sector, which had been weak due to industry downturn issues, showed strength led by Intel, with the Philadelphia Semiconductor Index surging 3.98%, which is expected to drive strength in the semiconductor sector that had declined last week.

Ahead of the U.S. Federal Open Market Committee (FOMC) meeting, although U.S. Treasury yields rose sharply after recent declines, the limited movement of the dollar is noteworthy. The market expects the Fed to raise rates by 75 basis points again in November through the FOMC, but also anticipates that the rate hike cycle is nearing its end. This suggests that future rate increases and dollar strength may be limited, increasing the likelihood of a tech stock rebound. Considering this, the domestic market is expected to start with a rise of around 1.5% today and maintain a solid performance.

◆ Han Ji-young, Researcher at Kiwoom Securities: "November FOMC will influence the market throughout this week... differentiated market expected"

[Image source=Yonhap News]

A differentiated market is expected to unfold based on individual earnings issues. Due to negative macro conditions, most big tech companies such as Alphabet and Amazon reported earnings last week that were worse than already lowered expectations, maintaining cautious sentiment around the earnings season.

However, as confirmed by the U.S. market’s rise led by sharp gains in Apple (7.55%) and Intel (10.7%), there are companies demonstrating solid earnings growth even amid an unstable top-down environment, and market funds seem to be concentrating on these companies. Market preference for sectors that provide earnings visibility is expected to increase even after the third-quarter earnings season.

Throughout this week, the domestic market is expected to be influenced by the November FOMC, but attention should also be paid to indicators affecting corporate earnings such as the U.S. ISM manufacturing index and Korean exports, as well as indicators influencing Fed policy decisions like U.S. nonfarm payrolls.

Accordingly, the domestic stock market is expected to digest macro events and show a differentiated market based on individual earnings issues.

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