[Good Morning Stock Market] US Stocks Firm on Bargain Buying... KOSPI Expected to Start Higher

[Image source=Yonhap News]

[Asia Economy Reporter Jang Hyowon] On the 21st, the KOSPI index is expected to start with an increase of around 0.5%. The firm tone of the previous day’s New York stock market is anticipated to have a positive impact on the domestic market as well.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,849.74, up 92.20 points (0.28%) from the previous day. The Standard & Poor’s (S&P) 500 index rose 3.96 points (0.10%) to 3,821.62, and the Nasdaq index closed at 10,547.11, up 1.08 points (0.01%).

The Dow index rebounded after five trading days. The rise is interpreted as driven by bargain buying following recent consecutive declines. In the early session, it started lower due to rising government bond yields caused by policy changes at the Bank of Japan (BOJ).

However, a rebound buying without clear direction flowed in most sectors including energy, finance, and industrials, turning the market bullish. Among major stocks, Tesla fell 8.1% due to target price cuts by major investment banks (IBs). Moderna, famous for its COVID-19 vaccine, rose 5.9% on momentum from new drug developments.

The previous day, the BOJ raised the upper limit of the 10-year government bond yield from 0.25% to 0.5%. As Japan moved toward tightening, the yen plunged more than 5% in one day. Due to this, market interest rates rose, especially for long-term bonds. The US 10-year Treasury yield increased by 11 basis points (bp) (1bp=0.01%) to 3.69%. The 2-year yield closed up 1bp at 4.26%.

The Philadelphia Semiconductor Index fell 0.62% the previous day. The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) rose 1.39%. The MSCI Emerging Markets Index ETF declined 0.03%. The New York Non-Deliverable Forward (NDF) 1-month USD/KRW exchange rate was 1,282.98 won, reflecting an expected 8 won decline in the exchange rate at the start of the day.

Seosangyoung, a researcher at Mirae Asset Securities, said, "Today, the KOSPI index is expected to start rising around 0.5%. The intraday weakness in the US stock market was mainly due to some stocks like Tesla, but sectors such as energy, industrials, and software showed solid performance, which is a positive factor for investor sentiment."

Researcher Seosangyoung added, "Although the yen’s strength had a significant impact, the euro also strengthened against the dollar due to easing concerns about a recession in the Eurozone, and the USD/KRW exchange rate declined, increasing the possibility of won appreciation, which is favorable. Therefore, the domestic market is expected to start higher and see inflows of rebound buying."

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