[Good Morning Stock Market] Will US-China Tensions Ease?

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Junho Hwang] On the 27th, various factors are expected to influence stock price fluctuations in the domestic stock market. Key factors include the bankruptcy issue of China's Evergrande Group, expectations for easing US-China tensions following the release of Meng Wanzhou, the daughter of Huawei's founder and vice-chairwoman of the Chinese telecommunications equipment company, and hawkish remarks from members of the US Federal Reserve (Fed).

Sangyoung Seo, a researcher at Mirae Asset Securities, stated, "The Evergrande bankruptcy issue is still ongoing, and the Fed members' remarks could negatively affect foreign investor demand, so the stock market is expected to start lower today."

Regarding the Evergrande issue, he believes that while it is unlikely to escalate into a systemic problem for the Chinese economy, it could stimulate a slowdown in China's growth rate and thus have some impact on the domestic stock market.

However, he added, "Expectations for easing US-China tensions and rising international oil prices are likely to have a positive effect on the stock market," and forecasted, "The domestic stock market is expected to start lower but then see a rebound buying trend."

On the 24th, the New York stock market interpreted the news of Vice-Chairwoman Meng's release as a signal of easing US-China tensions, with related stocks narrowing losses or turning to gains by the close. The Dow rose 0.10%, the Nasdaq fell 0.03%, the S&P 500 increased by 0.15%, and the Russell 2000 dropped 0.49%.

In the domestic stock market today, hawkish remarks from Fed members following the US Federal Open Market Committee (FOMC) meeting are also expected to have an impact. The US stock market showed a clear strength in financial stocks.

Junghoon Seo, a researcher at Samsung Securities' Investment Information Team, analyzed, "Despite the tightening stance reinforced at the September FOMC, risk appetite appears to be maintained," adding, "The financial market seems to reflect both tightening and the possibility of economic recovery simultaneously." He further noted, "Interest in fundamentals is expected to increase, and an approach focusing on value stocks rather than growth stocks is effective."