[Good Morning Stock Market] US Stock Market Hits 'All-Time High' as COVID-19 Impact Eases

[Image source=Yonhap News]

[Asia Economy Reporter Minji Lee] As concerns over the spread of COVID-19 have eased, the KOSPI recorded gains for the second consecutive day on the 12th. With the rate of increase in COVID-19 cases slowing down and the U.S. stock market showing strength, there are voices expecting further rises.

On the 12th (local time), major indices on the New York Stock Exchange all hit record highs amid expectations that the spread of COVID-19 would slow down. This was influenced by the Chinese authorities' announcement that the number of COVID-19 cases had dropped to the low 2,000s. Strong earnings from U.S. companies also drove the index gains. According to FactSet, about 70% of Standard & Poor's (S&P) 500 companies have reported earnings, with 71% of them exceeding market expectations. As a result, the Dow Jones Industrial Average on the New York Stock Exchange (NYSE) closed at 29,551.42, up 275.08 points (0.94%) from the previous session. The S&P 500 and the tech-heavy Nasdaq indices rose 0.65% and 0.9%, respectively.

◆ Jinwoo Lee, Researcher at Meritz Securities = The KOSPI is showing a rebound as concerns over COVID-19 ease. While there are voices suggesting that the impact of COVID-19 should still be considered, it is judged that the bottom has been confirmed. The key point about COVID-19 is that its transmission speed is faster than its fatality rate. Since the number of COVID-19 cases has been decreasing since the 4th, a turning point in the stock market has been formed.

Recently, the electric vehicle sector has stood out in the domestic stock market. Last year, semiconductors led the market, but this year, money is flowing into both semiconductors and electric vehicles. Samsung Electronics and SK Hynix account for 30% of the KOSPI's market capitalization. The market capitalization share of LG Chem and Samsung SDI has increased to 3.6%, up from 1.7% in 2015. The combined share of semiconductors and electric vehicles is approaching 35%.

There is also a market capitalization reversal occurring immediately between automakers and electric vehicle-related companies. In the U.S., Tesla's market capitalization is about 2.8 times that of GM. In Korea, the market capitalization rankings of Hyundai Motor and LG Chem have switched places. Stock prices of China's CATL, BYD, and Japan's Panasonic are also rising sharply. Since semiconductors and electric vehicles stand out in global stock markets as well, they are expected to show a long-term upward trend.

◆ Donggil Noh, Researcher at NH Investment & Securities = Foreign investors sold large amounts of IT stocks in the domestic market the previous day. This is closely related to the U.S. Federal Trade Commission (FTC) investigating whether IT companies such as Google, Apple, Facebook, Amazon, and Microsoft are violating competition laws. Since last year, major U.S. IT companies have been affected in their stock prices due to antitrust investigations. The expansion of the FTC investigation could increase market concerns related to antitrust laws. If the U.S. IT sector rebounds, it is expected that foreign investors' net selling could be reversed.