[Good Morning Stock Market] Samcheonpi Challenges 70,000-Won Level Again

On the 13th, dealers are working in the dealing room of Hana Bank in Euljiro, Seoul. On this day, the KOSPI index started at 2,913.34, down 3.04 points (0.10%) from the previous session, then turned upward. The won-dollar exchange rate opened steady and has been fluctuating in the high 1190 won range, alternating between rises and falls. Photo by Moon Honam munonam@

[Asia Economy Reporter Junho Hwang] As expectations for easing inflation grow, the U.S. stock market closed higher. With the anticipation that the factors weighing down global markets may be entering a calming phase, the domestic stock market is also expected to record gains for the third consecutive trading day. Attention is focused on the KOSPI reclaiming the 3000 level and Samsung Electronics recovering to 70,000 KRW per share.

On the 14th (local time), the Dow Jones Industrial Average rose 534.75 points (1.56%) to close at 34,912.56. The S&P 500 index increased by 74.46 points (1.71%) to 4,438.26, and the Nasdaq index gained 251.79 points (1.73%) to finish at 14,823.43. Positive news for individual stocks lifted their prices.

The possibility of improvement in inflation, which is currently pressuring global markets, boosted the stock market. First, following consumer prices, the U.S. Producer Price Index for September rose 0.5% month-over-month, slightly below the expected 0.6%. The inflation figures falling short of expectations somewhat eased market concerns about inflation. Additionally, weekly initial jobless claims recorded 293,000, significantly down from the previous week (329,000) and the recent 4-week average (329,000). The improvement in employment indicators reduced worries about delayed economic recovery due to the spread of the COVID-19 Delta variant and rising prices.

This positive sentiment is expected to have a favorable impact on the domestic stock market as well. Ji-young Han, a researcher at Kiwoom Securities, analyzed, "Since the sharp rise in raw material prices has not fully entered a calming phase, it is premature to conclude that inflation anxiety has disappeared, but factors that could potentially suppress future inflation expectations (such as government policies resolving logistics disruptions and factory restarts due to the easing of the Delta variant) are emerging, which is positive for the stock market."

On the same day, November delivery West Texas Intermediate (WTI) crude oil prices on the New York Mercantile Exchange closed at $81.31 per barrel, up 1.1% from the previous trading day. This is the highest level in seven years since October 2014. Although U.S. crude oil inventories increased more than expected, forecasts of higher demand for crude oil during the winter season pushed prices up.

He added, "The KOSPI is expected to attempt to stabilize above the 3000 level, supported by easing inflation anxiety and favorable third-quarter earnings season outlooks. With the weakening of the dollar's strength and strong intervention intentions from domestic authorities, the exchange rate environment is judged to have passed its worst phase."

Expectations for the price boost of Samsung Electronics, the unchanging market leader, have also increased. On the same day, Taiwan semiconductor company TSMC, listed on the U.S. Nasdaq, showed strength following improved earnings due to increased chip demand and guidance that exceeded expectations. Micron and Texas Instruments also showed gains. Consequently, the semiconductor-related exchange-traded fund (ETF) SMH Semiconductor rose by 3.00%.

Sang-young Seo, a researcher at Mirae Asset Securities, explained, "The Philadelphia Semiconductor Index rose 3.08%, supported by TSMC's strong earnings. The positive sentiment toward the semiconductor sector, which has seen continuous foreign selling due to recent industry concerns, is improving."