[Good Morning Stock Market] US Stocks Rise on Strong Corporate Earnings... "Domestic Market Expected to Start Higher"

[Image source=Yonhap News]

[Asia Economy Reporter Ji-hwan Park] Overnight, the US stock market closed mostly higher as major indices showed strength amid rising market interest rates, inflation concerns, continued expectations of strong corporate earnings, and risk asset preference driven by Bitcoin reaching a new all-time high. The domestic stock market is also expected to start higher, with sectoral and stock-specific differentiation anticipated.

On the 20th (local time) in the New York market, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 35,609.34, up 152.03 points (0.43%) from the previous trading day. During the session, it even surpassed the intraday high recorded in August. The closing price was just 0.1% shy of the all-time high.

The Standard & Poor's (S&P) 500 index also rose 16.56 points (0.37%) to 4,536.19. In contrast, the Nasdaq fell 7.41 points (0.05%) to 15,121.68, ending a six-day winning streak.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = The US stock market showed strength centered on some companies reporting solid earnings, with the Dow Jones index briefly hitting an all-time high during the session, which is favorable for the Korean stock market. However, hawkish remarks from Federal Reserve officials and the Beige Book's expression of concerns about slowing US economic activity and high inflation remain burdensome.

Nevertheless, the Chinese government's announcement of consumption stimulus policies the previous day and the Fed's Beige Book noting positive growth in consumer spending are positive for improving investor sentiment. Increased consumption could have a favorable impact on Korean exports in the future, benefiting Korea, which is highly dependent on exports.

Today, the Korean stock market is expected to start slightly higher, with changes anticipated depending on external factors such as export-import statistics up to the 20th and earnings results from some companies. Generally, as seen in global markets, a differentiated market by sectors and stocks is expected to continue.

◆ Jiyoung Han, Researcher at Kiwoom Securities = As the Fed pointed out in the Beige Book, labor shortages are occurring in most regions so far, and companies are increasingly passing on cost increases caused by bottlenecks and margin pressures to customers. Supply-side inflation issues are ongoing. However, the fact that 80% of companies that have reported earnings so far posted better-than-expected results suggests that inflationary pressures are having a limited impact.

The Chinese government is pushing for intervention in the coal market to control prices, and global freight data signals that peak levels may have been reached, so it is necessary to avoid overreacting negatively to the current high inflation situation.

As confirmed by Bitcoin briefly surpassing 81.7 million won and hitting a new intraday high, risk asset preference continues. The domestic stock market is also expected to show an upward trend influenced by the positive momentum from the US. Attention should be paid to whether Tesla's earnings surprise during the session can provide a rebound momentum for secondary battery stocks, which have recently undergone short-term corrections.

Of course, given the speed burden from the recent rapid short-term rebound, the index's upper limit is expected to be constrained. If the October export results announced during the session show better-than-expected strength, the upward momentum could improve.