[MarketING] Despite US Economic Slowdown Concerns, Kospi Strengthens

KOSPI Gains for Second Day Amid Institutional Buying
KOSDAQ Rises for Third Day, Settles Above 860 Level

The KOSPI continued its slight gains for the second day, recovering the 2490 level during the session. The KOSDAQ also rose for the third consecutive day, settling around the 860 level. Despite weakness in the U.S. stock market due to concerns over an economic slowdown, buying pressure from institutions and individuals has driven the index higher.

KOSPI Gains for Second Day... Recovers 2490 Level Intraday

As of 10:15 a.m. on the 5th, the KOSPI stood at 2485.93, up 5.42 points (0.22%) from the previous day. The KOSDAQ rose 7.17 points (0.84%) to 864.35.

Despite the U.S. stock market showing weakness due to concerns over an economic slowdown the previous day, buying by institutions and individuals has supported the market's strength. On this day, institutions net purchased 110.9 billion KRW in the KOSPI market, and individuals bought 84.1 billion KRW in the KOSDAQ market, driving the rise in each index. Foreigners are net selling 102 billion KRW and 62.5 billion KRW in the KOSPI and KOSDAQ markets respectively, but are buying futures worth more than 500 billion KRW.

Although the U.S. stock market declined due to concerns over an economic slowdown, the domestic market appears to be rising amid a weaker dollar. On this day, the won-dollar exchange rate in the Seoul foreign exchange market opened at 1313.0 won, down 2.8 won from the previous day, and has been moving in the low 1310 won range.

On the 4th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 0.59%, the S&P 500 dropped 0.58%, and the Nasdaq declined 0.52% compared to the previous day. This weakness was due to economic indicators released that showed sluggish performance, increasing concerns about an economic slowdown.

According to the Job Openings and Labor Turnover Survey (JOLTs), the number of job openings in February was 9,931,000, down about 630,000 from the previous month. This was significantly below the market expectation of 10,400,000. It was the first time since May 2021 that monthly job openings fell below 10 million.

U.S. factory orders in February decreased by 0.7% compared to the previous month, missing the expected decline of 0.5%.

Sangyoung Seo, a researcher at Mirae Asset Securities, explained, "The speed of the U.S. economic slowdown is progressing rapidly, acting as a negative factor for the stock market," adding, "After the release of the indicators, the dollar weakened, interest rates fell, and indices declined."

Earlier strong U.S. employment data had supported the Federal Reserve's (Fed) tightening, but recent weak employment figures have increased expectations for an early end to rate hikes. Jiyoung Han, a researcher at Kiwoom Securities, analyzed, "During the first quarter, the sharp increase in jobs, mainly in the service sector, was closely linked to the Fed's tightening intensity and tended to act as a negative factor for the stock market, but this effect seems to be fading. It suggests that the solid employment market foundation, which justified the Fed's aggressive rate hikes to control inflation, is weakening."

Fading Tightening Concerns

The Fed's tightening concerns, which have influenced the market trend this year, appear to be somewhat easing. With weak employment data raising expectations for a change in the Fed's rate hike stance, market attention is expected to focus on the U.S. March employment report to be released on the 7th.

One researcher said, "It is necessary to check the trend by reviewing the March employment report scheduled for release on the 7th," adding, "It is important to note that key items such as new employment, unemployment rate, and average hourly wages are generally expected to come out weak." He continued, "Considering the entry into a slowing employment market trend, the possibility of additional banking sector crises, and the policy shifts emerging as dominant opinions in the market, it is appropriate to assume as a base scenario for market response that the Fed's policy direction will become less hawkish and less unfavorable to the stock market through upcoming Federal Open Market Committee (FOMC) meetings."

The preliminary first-quarter earnings report of Samsung Electronics, to be released on the 7th, is also important. Yujun Choi, a researcher at Shinhan Investment Corp., said, "Risk appetite continues to improve due to the easing of the U.S. banking liquidity crisis and expectations that the semiconductor industry has passed its bottom, but the upper limit of the index is still constrained, resulting in a continued rotation market. The direction of the index is likely to be determined by semiconductor stock prices, so the impact of Samsung Electronics' first-quarter preliminary earnings on the 7th will be significant."

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