[Good Morning Stock Market] Despite Weakness in US Stocks, KOSPI Expected to Start Slightly Higher... FOMC Aftershocks Continue

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jaehee] On the 4th, the domestic stock market is expected to start with a slight rise. The Bank of England mentioned a recession in the UK during its monetary policy meeting, causing the pound to weaken sharply against the dollar. This triggered a strengthening of the dollar, and the fact that the US stock market saw selling pressure centered on tech stocks the previous day is likely to weigh on our stock market. However, the fact that most sectors except for some tech stocks showed strength is a positive factor. Additionally, some semiconductor stocks such as AMD (2.52%), which had given back gains due to the decline in the US stock market, showed strength, which is favorable as it indicates a high possibility of strength in related stocks that had widened their losses during the previous day’s simultaneous quotation. Considering this, despite the decline in the US stock market, the Korean stock market is expected to start slightly higher and maintain a solid performance.

The New York stock market fell mainly in tech stocks as the Bank of England mentioned a recession in the UK during its monetary policy meeting, causing the pound to weaken sharply and the dollar to strengthen. Moreover, the decline widened among large tech stocks and software sectors, including Apple (-4.24%), which faced negative issues. However, industrials and energy sectors showed resilience, resulting in a differentiated market where the Dow Jones Industrial Average fell relatively less. On the 3rd (local time), the Dow Jones Industrial Average closed at 32,001.25, down 0.46% from the previous session. The Standard & Poor’s (S&P) 500 index fell 1.06% to 3,719.89, and the Nasdaq index dropped 1.73% to 13,042.94. All three major indices fell for the fourth consecutive trading day.

Qualcomm (-7.66%) fell after lowering its sales guidance due to a decrease in smartphone shipments. This, along with the dollar’s strength and news of Foxconn factory shutdowns, contributed to the widened decline of Apple (-4.24%). Alphabet (-4.07%), Amazon (-3.06%), and Microsoft (-2.66%) also fell due to the strong dollar and slowing advertising revenue. On the other hand, solar industry stocks such as First Solar (5.10%) and Jinko Solar (2.46%) rose together. Starbucks (0.12%) reported solid earnings with increased sales at US stores and rose over 2% in after-hours trading.

◆ Seosangyoung, Head of Media Content Division at Mirae Asset Securities: "Despite the US stock market decline, KOSPI will show a slight rise followed by a solid trend"

[Image source=Reuters Yonhap News]

The KOSPI index is expected to start slightly higher on the 4th. The previous day, our stock market’s investor sentiment was dampened as the US stock market fell sharply, with the Nasdaq dropping over 3% following Federal Reserve Chair Jerome Powell’s mention of a final rate hike. The foreign selling pressure, in particular, was cited as a factor for the early session weakness. However, as time passed and the exchange rate stabilized, foreigners switched to buying. Especially, the clear strength of secondary battery companies even led to a temporary shift to gains. Nevertheless, due to institutional selling mainly by financial investors, the KOSPI closed down 0.33%, and the KOSDAQ fell 0.46%.

Meanwhile, the Bank of England’s mention of a UK recession during its monetary policy meeting caused the pound to weaken sharply against the dollar, triggering dollar strength and selling pressure centered on tech stocks, which is a burden on our stock market as well. Particularly, the fact that the UK hinted at a recession while Fed Chair Powell mentioned that the possibility of a soft landing is narrowing is a negative factor for our export-dependent economy.

However, the fact that most sectors except some tech stocks showed strength is positive. Furthermore, expectations for the US employment report to be released today are also positive. Especially, wage growth pressure is expected to ease, which could highlight the possibility of a weaker dollar going forward. Among these, some semiconductor stocks such as AMD, which had given back gains due to the US stock market decline the previous day, showed strength, which is favorable as it indicates a high possibility of strength in related stocks that had widened their losses during the previous day’s simultaneous quotation. Considering this, despite the US stock market decline, our stock market is expected to start slightly higher and maintain a solid trend today.

◆ Han Ji-young, Researcher at Kiwoom Securities: "Amid ongoing downward pressure on stock prices, sector and earnings differentiation"

[Image source=Reuters Yonhap News]

Today, the domestic stock market’s downward pressure on sectors and stock prices is expected to vary depending on individual earnings results. Despite the US stock market’s weakness the previous day, cyclical sectors showed relative strength due to individual issues.

Our stock market started sharply down the previous day but narrowed losses and closed with support from strong earnings from major companies such as SK Innovation and continued net buying by foreigners (KOSPI -0.3%, KOSDAQ -0.5%).

It is expected to remain within the aftereffects of the November Federal Open Market Committee (FOMC) meeting today, with concerns over the US October employment data to be released tonight and the strong dollar acting as burdens, likely resulting in downward pressure.

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