[Good Morning Stock Market] US Wage Growth Slows... KOSPI Expected to Start Higher

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] The KOSPI is expected to start with a rise of over 1% on the 9th, followed by a process of digesting some sell-offs. This is because it is likely to be influenced by the sharp rise in the New York stock market, which highlighted the slowdown in the pace of wage increases in the U.S. and the possibility of a soft landing for the economy.

On the 6th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,630.61, up 700.53 points (2.13%) from the previous session. The S&P 500, centered on large-cap stocks, closed at 3,895.08, up 86.98 points (2.28%), and the Nasdaq, focused on technology stocks, ended the session at 10,569.29, up 264.05 points (2.56%).

The reason for the U.S. stock market's cheer was the confirmation of signs of a slowdown in wage growth. Earlier, the U.S. announced that nonfarm payrolls increased by 223,000 in December last year. This exceeded expectations (200,000) but was lower than the previous month (256,000).

The number of nonfarm payrolls is a key item referenced by the Federal Reserve (Fed) when deciding interest rates and is an event closely watched by the market. The Fed has emphasized its tightening stance, pointing to a robust labor market and wages that have been slow to come down.

Although the employment market remained strong with an increase in the unemployment rate (3.6% → 3.5%) and labor force participation rate (62.2% → 62.3%), a slowdown in nonfarm payrolls was confirmed. Additionally, hourly wages fell from 0.40% to 0.27% month-over-month. Compared year-over-year, the growth slowed from 4.8% to 4.6%.

Major indices influencing the Korean stock market also showed strength. In the New York stock market, the Philadelphia Semiconductor Index rose 4.67%, the Dow Transportation Index 3.38%, and the Russell 2000 Index 2.26%. On the 9th, net buying in the semiconductor sector is expected to continue following the previous trading day.

On the 6th, Samsung Electronics announced that its operating profit for the fourth quarter of last year was 4.3 trillion won, significantly below market expectations. Despite recording an earnings shock, the stock turned upward on the day of the preliminary earnings announcement. On the same day, semiconductor sector bottoming theories were highlighted due to forecasts of reduced semiconductor investments from Citi Securities, leading to strong buying by foreigners and institutions in the semiconductor sector.

The exchange rate is expected to see an expanded won appreciation due to the dollar's weakness. This is positive as the foreign net buying trend may continue.

However, concerns about the slowdown in domestic companies' fourth-quarter earnings remain a burden. The forecast for Korea's fourth-quarter operating profit was revised down by 2.3% compared to the previous week, indicating a continued profit slowdown. It is also negative that both the U.S. manufacturing and service indices fell below the baseline, raising concerns about an economic slowdown.

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