[MarketING] Stock Market Holds Breath Amid US-China Economic Data Releases

KOSDAQ Rises for Second Day
KOSDAQ Closes Up After 7 Trading Days

The KOSPI continued its slight upward trend for the second consecutive day. The KOSDAQ also turned positive after seven trading days. Although it started higher due to strength in semiconductors, the rise was limited by selling pressure following disappointing Chinese economic indicators and cautious sentiment ahead of the U.S. economic data release.

KOSPI edges up for second day... recovers to 2480 level

On the 16th, the KOSPI closed at 2480.42, up 0.89 points (0.04%) from the previous day. The KOSDAQ ended the session at 816.75, rising 2.22 points (0.27%).

[Image source=Yonhap News]

Foreign investors drove the KOSPI higher, while individual investors led the KOSDAQ's gains. On that day, foreign investors net bought 226.3 billion KRW in the KOSPI market. Individuals and institutions net sold 125.2 billion KRW and 57.9 billion KRW, respectively. In the KOSDAQ market, only individual investors net bought 139.9 billion KRW, while foreign investors and institutions sold 65.4 billion KRW and 80.6 billion KRW, respectively.

With foreign buying inflows, Samsung Electronics and SK Hynix rose sharply for the first time in a while. Foreign investors purchased SK Hynix and Samsung Electronics with net buys of 217.1 billion KRW and 211.6 billion KRW, ranking first and second in net purchases. SK Hynix rose 4.63%, and Samsung Electronics increased by 1.40%.

The domestic market, which had shown gains following the semiconductor strength in the U.S. stock market the previous day, saw its gains narrow as selling emerged after Chinese real economy data fell short of expectations. Seosangyoung, a researcher at Mirae Asset Securities, explained, "The domestic market started higher as the U.S. market showed strength led by semiconductor sector gains, but selling emerged due to uncertainties such as the U.S. debt ceiling negotiations and disappointing Chinese real economy data. As the market digested these ahead of major upcoming events in the afternoon, the market fluctuated within a narrow range."

According to China's National Bureau of Statistics, China's industrial production in April increased by 5.6% year-on-year, and retail sales rose by 18.4%. Industrial production exceeded the previous month's 3.9% but fell significantly short of the market expectation of 10.9%. Retail sales also surpassed the previous month's 10.6% but were below the expected 21.0%.

China's fixed asset investment from January to April increased by 4.7% year-on-year, falling short of the previous month's 5.1% and the forecasted 5.5%.

Lee Kyungmin, a researcher at Daishin Securities, said, "There is a need to be cautious about the possibility of increased short-term volatility due to the disappointing Chinese economic indicators," adding, "It is more important to restore and strengthen confidence in the direction of the economy rather than concerns about the speed and strength of the recovery."

Cautious sentiment ahead of U.S. economic data release

Following the release of Chinese real economy data, U.S. real economy data will be announced later that night. U.S. retail sales for April are expected to improve from a 1.0% month-on-month decline reported last month to a 0.7% increase. April industrial production is estimated to have slowed from a 0.4% month-on-month increase last month to 0%.

Researcher Seo said, "Retail sales excluding gasoline and automobiles are expected to improve from a 0.3% month-on-month decline reported last month to a 0.2% increase, but considering the recent decline in sentiment indicators, the figures may fall short of market expectations," adding, "Industrial production may also fall below expectations when considering other economic indicators."

He added, "Given the limited strength of the retail sales rebound, it is reasonable to view it as a rebound rather than a recovery in consumption," and "The U.S. economy will once again confirm that the overall slowdown is continuing."

If U.S. economic indicators also fall short of market expectations following the Chinese data, the stock market is likely to react negatively. Han Jiyoung, a researcher at Kiwoom Securities, analyzed, "Currently, the market is highly sensitive not only to whether the Federal Reserve (Fed) will end its tightening but also to the side effects after tightening such as a recession. Therefore, if these indicators come out weak, it is necessary to prepare for the possibility of a negative stock price reaction."

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