[Good Morning Stock Market] US Stock Market Rises Despite Weak Economic Indicators... Impact on KOSPI

[Image source=Yonhap News]

[Asia Economy Reporter Ji-hwan Park] The U.S. stock market continued its unstoppable upward march despite various weak economic indicators. On the 2nd (local time), the Dow Jones Industrial Average closed up 454.84 points (1.59%) at 29,100.50. The Standard & Poor's (S&P) 500 index also closed up 54.19 points (1.54%) at 3,580.84, and the tech-heavy Nasdaq index closed up 116.78 points (0.98%) at 12,056.44. The Nasdaq surpassed the 12,000 mark for the first time ever.

On this day, the U.S. stock market's upward trend was not broken despite weak employment data. Private sector employment recorded 428,000, falling short of the market expectation of 900,000 and less than half of the forecast. Although this triggered concerns about employment instability, the investment enthusiasm did not cool down. Considering these factors comprehensively, the domestic stock market is expected to continue an individual stock market trend depending on foreign investors' supply and demand trends.

◆ Sang-young Seo, Kiwoom Securities Researcher = The U.S. stock market continued its upward trend despite the economy being significantly below pre-pandemic levels, especially with worsening employment instability. Despite the U.S. State Department's announcement of sanctions against Chinese diplomats and Tesla's intraday volatility with a 15% plunge, the market closed higher, supported by Federal Reserve officials' statements maintaining a long-term low interest rate policy and positive remarks on additional policies.

This strong investor sentiment is expected to influence the Korean stock market as well. However, considering the delayed U.S. economic recovery, the sharp drop in international oil prices, and the strong dollar, there is a high possibility of foreign selling pressure, which is a burden. Taking this into account, the index is expected to show limited movement with changes depending on foreign investors' supply and demand trends. Additionally, individual stocks are expected to reflect changes, such as the Philadelphia Semiconductor Index rising 2.84% thanks to NVIDIA. The Korean stock market is likely to experience an individual stock market trend amid the process of absorbing profit-taking sales.

◆ In-ji Jung, Yuanta Securities Researcher = Despite somewhat unstable intraday movements, the KOSPI continued its upward trend for the second day. Despite five consecutive days of foreign selling, including about 1.6 trillion KRW net sales by foreign investors on August 31, individual investors formed buying momentum and defended the market. The KOSPI showed increased volatility with a sharp rise in early August and a sharp fall in mid-August but has continuously stayed above the 30-day moving average while raising short-term lows.

In particular, although foreign investors made large net sales at the end of last month, the KOSPI's decline was limited to 1.17%. Typically, when foreign investors record large-scale net sales, it is often during a sharp decline phase, but a temporary net sale of over 1 trillion KRW during an upward phase like recently was seen on November 11, 2010, the options expiration day. At that time, foreign investors net sold 1.3 trillion KRW, and the KOSPI fell 2.7%. After the large-scale foreign net sales day, the KOSPI showed somewhat irregular movements but did not fall below the 60-day moving average and resumed its upward trend. Currently, it appears more robust. Although the MACD (Moving Average Convergence Divergence) still signals a sell, and short-term moving averages show mixed trends, confirmation is needed for entry into a short-term upward phase. If it switches to a buy signal, a short-term upward phase may begin.