[Good Morning Stock Market] US Earnings Optimism Overshadows Economic Concerns... Will KOSPI Defend 3000?

[Asia Economy Reporter Ji Yeon-jin] On the 18th (local time), the U.S. stock market successfully turned upward as rebound buying flowed in amid expectations for the earnings season. The Nasdaq index rose 0.84%, and the S&P 500 index closed up 0.34%. However, the Dow Jones index fell 0.10%. The domestic stock market is also expected to start higher, but it is forecasted to undergo a process of digesting sell-offs ahead of the earnings season.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = The U.S. stock market started lower due to weak economic indicators from China and the U.S., but showed strength centered on stocks expected to improve earnings. While the Nasdaq's upward trend was clear, the Dow showed a differentiated decline due to the weakness of some stocks affected by negative factors. The rise was further extended on expectations for Apple (+1.18%).

Netflix (+1.54%) rose as its target price was raised due to increased content production, and Facebook (+3.26%) and Tesla (+3.21%) rose on strong earnings and upward revisions to annual delivery guidance. Apple also expanded its gains after announcing products such as AirPods and Mac Pro.

Although U.S. industrial production was weak, the resilience in the high-tech sector is positive for the Korean stock market. The Nasdaq's strong performance in the U.S. stock market was clearly driven by expectations for individual company earnings, so its impact on the Korean stock market is expected to be limited.

Meanwhile, the forecast for Korean companies' third-quarter net profit decreased by 0.4% compared to last week, and the 2022 forecast was also revised downward by 1.2% to KRW 175.2 trillion, which is a burden.

◆ Ji-young Han, Researcher at Kiwoom Securities = U.S. industrial production in September fell 1.3% month-on-month, showing weakness due to the prolonged semiconductor shortage. China's September industrial production grew 3.1% year-on-year but showed signs of slowing due to power shortages. Considering winter heating demand, there is a possibility of further increases in raw material prices, so inflation issues caused by supply and raw materials are unlikely to be resolved quickly.

However, the stock market tends to lead the economy and develop resistance to repeated negative factors, so current market participants seem to be getting accustomed to inflation triggered by supply shortages. As confirmed by recent government efforts worldwide to address logistics and supply issues, the current inflation situation is not an uncontrollable area. As U.S. and China's September retail sales recorded surprises,

demand remains robust, and deferred demand for the future also exists.

The KOSPI, having accumulated short-term fatigue from consecutive rises, is expected to show a slightly firm trend. Starting today, major tech and growth stocks such as Netflix, Tesla, and Intel will announce earnings in the U.S. this week, so cautious sentiment surrounding these announcements is expected to affect the domestic stock market as well. However, considering that 80% of the 41 companies that have reported third-quarter earnings so far posted better-than-expected results, and that domestic companies are also recording better-than-expected earnings, the earnings momentum that had been dormant for a while may be reestablished.