[Good Morning Stock Market] "US Stocks Rise on Eased Economic Concerns... KOSPI Also Expected to Climb"

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] The U.S. stock market showed strength due to the Federal Reserve's delay in tapering (asset purchase reduction) and Pfizer vaccine's full approval by the U.S. Food and Drug Administration (FDA). Recently, concerns about economic slowdown caused by accelerated exit strategies and the spread of the COVID-19 Delta variant had worsened investor sentiment, but it is now improving, which is analyzed to be driving the stock market upward.

On the 23rd (local time), the Dow Jones Industrial Average in New York closed at 35,335.71, up 215.63 points (0.61%) from the previous session. The Standard & Poor's (S&P) 500 index rose 37.86 points (0.85%) to 4,479.53, and the Nasdaq index, which is tech-heavy, also closed up 227.99 points (1.55%) at 14,942.65. The easing of early tapering concerns by the Federal Reserve and the FDA's full approval of Pfizer's vaccine stimulated investor sentiment with expectations of expanded vaccinations.

The KOSPI, which ended higher after three trading days, is also expected to continue its upward trend. The previous day, the KOSPI closed at 3,090.21, up 29.70 points (0.97%) from the previous trading day. This rebound followed declines of over 1% for two consecutive trading days. Domestic market experts predict that the KOSPI's upward momentum is likely to continue due to the easing impact of economic slowdown in the U.S. stock market and the stabilization of the won-dollar exchange rate.

◆ Seo Sangyoung, Researcher at Mirae Asset Securities = On this day, the domestic stock market is expected to continue rising due to foreign demand expectations. The KOSPI is anticipated to start with an increase of around 0.5%. The Korean stock market rose the previous day as rebound buying entered following recent declines. In particular, the Asian stock markets were supported by the Chinese stock market's strength, driven by the Chinese government's announcement of compliance with U.S. accounting regulations and the news of no new COVID-19 cases in China. Additionally, foreign investors, who had been selling, switched to net buying during the day, which also positively influenced supply and demand.

Meanwhile, the U.S. stock market rose as concerns about economic slowdown eased and positive news from individual companies flowed in, which is a positive factor. Especially, international oil prices surged as active buying entered despite expiration date effects, and the strength in other commodity futures markets is expected to increase risk asset preference.

Furthermore, the Philadelphia Semiconductor Index rose 2.63% due to the Chinese government's approval of M&A for semiconductor-related companies and positive news from individual companies, which is also a positive factor. Thus, concerns about U.S. economic slowdown eased and semiconductor-related stocks showed strength. Following the sharp rise in international oil prices, the weak dollar may have a favorable impact on foreign demand, so the Korean stock market's strength is expected to continue.

◆ Han Jiyoung, Researcher at Kiwoom Securities = The Korean stock market is expected to show an upward trend, supported by positive factors from the U.S., such as the delay in early tapering and Pfizer's full vaccine approval. Following the previous trading day, technical buying is expected to continue due to the perception that the recent two-week sharp decline was excessive. The expectation of demand recovery from China, due to the slowdown in new COVID-19 cases there, is also being highlighted positively again.

Considering that the rapid rise in the won-dollar exchange rate is calming down, foreign demand conditions are expected to gradually improve. Also, as seen in the semiconductor stock price trend, which had a relatively smaller decline last week, concerns about the semiconductor industry are entering a phase of easing. This price floor rigidity in the semiconductor sector is expected to support the overall market downside even during periods of increased market volatility in the future.