[Good Morning Stock Market] Will Rebound Buying Come... Stock Market in the Fog

On the 6th, KOSPI opened at 2,927.50, down 26.47 points (0.90%) from the previous trading day. Dealers are working in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. On the same day, the won-dollar exchange rate started trading at 1,200.9 won, up 4.0 won from the previous trading day. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Junho Hwang] The domestic stock market is experiencing considerable shock amid the accelerated pace of U.S. monetary tightening. Following discussions on tapering (asset purchase reduction), benchmark interest rates, and even quantitative tightening, the won/dollar exchange rate surpassed 1,200 won, causing risk asset preference to rapidly freeze. On the 7th, as this impact continues, the influx of rebound buying is expected to determine the direction of the stock market.

On the 6th (local time), the U.S. stock market initially showed a flat trend due to rebound buying following recent declines but closed lower. The Dow Jones Industrial Average fell 0.47%, the S&P 500 dropped 0.1%, and the Nasdaq declined 0.13%.

Due to the Federal Reserve's hawkish stance on U.S. monetary policy, U.S. Treasury yields rose, increasing downward pressure on the stock market. The 10-year U.S. Treasury yield at one point rose 4.5 basis points from the previous day's close to 1.750%. The 2-year U.S. Treasury yield, sensitive to monetary policy, at one point increased more than 4.4 basis points to 0.885%.

As the pace of U.S. tightening accelerated, the won-to-dollar exchange rate exceeded 1,200 won for the first time in a year and a half. According to the Seoul foreign exchange market, on the 6th, the won/dollar exchange rate closed at 1,201.0 won, up 4.1 won from the previous trading day. The rate opened at 1,200.9 won, up 4 won, and surpassed 1,200 won immediately after the market opened. The won/dollar exchange rate exceeding 1,200 won is the first time in three months since October last year. On a closing basis, it is the first time in about a year and a half since July 24, 2020 (1,201.50 won).

Amid this atmosphere, the outlook for the stock market on this day is bleak. The influx of rebound buying following a 2.29% decline in the KOSPI over the past two trading days and a 5.54% drop in the KOSDAQ over three trading days is expected to be a key indicator determining the market's direction. In particular, Samsung Electronics, the unwavering blue-chip stock in Korea's market, will announce its earnings on this day. Samsung Electronics is expected to achieve record-high annual earnings based on last year's performance.

Seosangyoung, a researcher at Mirae Asset Securities, analyzed, "Based on Samsung Electronics' positive earnings announcement, the market is expected to show strength centered on stocks with upwardly revised earnings estimates after a slight rise at the start. However, attention should be paid to related trends as exchange rate volatility is expanding."

Han Jiyoung, a researcher at Kiwoom Securities, said, "Today, the domestic stock market is expected to attempt a rebound, supported by the limited weakness of the U.S. stock market on the previous trading day and the excessive recognition of continuous price declines since the beginning of the year."