[Good Morning Stock Market] Five-Day Chuseok Holiday... Key Factors Affecting the Domestic Stock Market?

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[Asia Economy Reporter Park Jihwan] The five-day Chuseok holiday begins from the 30th of this month until the 5th of next month. During the holiday period, major events such as the first TV debate between U.S. presidential candidates and the release of key economic indicators are expected to become variables affecting the domestic stock market. Experts commonly pointed to the TV debate between U.S. President Donald Trump and Democratic candidate Joe Biden as the biggest variable. It is analyzed that the volatility of the financial market could increase depending on the statements made by both candidates during the debate. However, since the debate results will affect the domestic stock market after the holiday, the impact is also expected to be limited.

◆ Seo Sangyoung, Kiwoom Securities Researcher = The U.S. stock market showed a rebound buying trend spreading from major tech stocks to peripheral sectors such as banks, steel, and energy, which had sharply declined last week. This is expected to have a positive effect on domestic stock market investor sentiment. In particular, the dollar showed weakness, and risk asset preference sentiment spread across the financial market as international oil prices and government bond yields rose, which is expected to have a favorable impact. However, the political uncertainty surrounding the U.S. presidential election during the Chuseok holiday, major economic indicators such as U.S. manufacturing data and employment reports, and important events like Micron’s earnings announcement are expected to pose burdens. Considering this, the domestic stock market is expected to start higher but will likely continue to digest selling pressure ahead of the Chuseok holiday.

◆ Han Daehun, SK Securities Researcher = First, the U.S. nonfarm payroll data is scheduled to be released on October 2. The current market forecast expects new jobs in September to slow down to an increase of 800,000 from August’s 1.37 million, and the unemployment rate to slightly improve from 8.4% in August to 8.2%. Second is the political situation in the U.S. The possibility of passing an additional stimulus package has further decreased and is expected to become a major issue in the presidential election. Newly appointed Justice Barrett also holds a negative stance on Obamacare, increasing the likelihood of a ruling declaring Obamacare unconstitutional. Investment sentiment toward the U.S. healthcare sector is expected to further contract. The event likely to attract the most attention during this Chuseok holiday period is the first U.S. presidential candidate TV debate held on the 29th. The debate topics will cover the economy, COVID-19, the federal Supreme Court, election trust issues, racial issues, and violent protests in major cities.

◆ Kim Daejun, Korea Investment & Securities Researcher = Typically, before holidays like Chuseok or Seollal, investors go through a process of neutralizing their positions. This is because there is a strong tendency to avoid the temporary reflection of overseas variables on stock prices during breaks longer than three days. This time is expected to be no different. After the holiday, the market’s interpretation of the debate results between Trump and Biden can be confirmed through the U.S. stock market, and since the Korean stock market reflects the variables whose influence has been moderated, market fluctuations may not be as large as expected.