[Good Morning Stock Market] US Mixed Close... 'Exchange Rate and Oil Price Drop' Raises Expectations for Domestic Market Boost

[Asia Economy Reporter Ji Yeon-jin] The U.S. stock market closed mixed on the 7th (local time). Early in the session, the market rose following comments by Christine Lagarde, President of the European Central Bank (ECB), who said that Eurozone inflation could stabilize in the 2% range. However, volatility increased just before the close as concerns over the Ukraine situation resurfaced during the U.S.-Germany summit. The Dow Jones Industrial Average ended flat at 0%, while the Nasdaq and Standard & Poor's (S&P) indices fell 0.58% and 0.37%, respectively. Nonetheless, these factors are expected to have a limited impact on the domestic stock market.

◆ Seo Sang-young, Researcher at Mirae Asset Securities = The U.S. stock market turned downward as European privacy and antitrust regulatory issues involving Meta Platforms (-5.14%) and Alphabet (-2.86%) came to the forefront. Meta Platforms announced in its annual report that if European regulators block the transfer of European users' personal data to the U.S., Facebook and Instagram could be shut down in Europe. The reopening of borders in Australia, primarily for vaccinated individuals, highlighted global with-COVID issues, leading to strength in related stocks and a sector-driven market. Netflix (-1.97%) declined amid concerns over subscriber churn due to price hikes amid intensifying competition.

The MSCI Korea Index ETF rose 0.33%, the MSCI Emerging Markets Index ETF fell 0.21%, and the 1-month NDF USD/KRW exchange rate stood at 1,198.05 won, suggesting a 3 won decline at the start of trading. Although the U.S. stock market showed a mixed trend near flat, the decline was mainly due to individual factors such as Meta Platforms, implying limited impact on the Korean stock market. On the contrary, except for some stocks, most sectors showed resilience, and expectations for easing the Ukraine issue were raised through the France-Russia summit. Additionally, the with-COVID theme boosted related sectors in the U.S. market, which is expected to positively influence the Korean stock market. Furthermore, the decline in the NDF USD/KRW exchange rate and international oil prices, driven by progress in U.S.-Iran nuclear talks, are improving market conditions. Considering these factors, the Korean stock market is expected to start with about a 0.7% rise and maintain a firm stance.

◆ Han Ji-young, Researcher at Kiwoom Securities = Geopolitical tensions surrounding Ukraine are expected to remain a major market variable for some time. However, as the earnings season enters its mid-phase, stock prices are likely to differentiate based on corporate earnings changes. New COVID-19 cases in major countries, including the U.S., have peaked, and the Australian government announced that from the 21st, entry will be allowed only for vaccinated individuals. Domestically, indications of transitioning to daily life recovery when severe cases and fatality rates stabilize suggest that reopening themes will again attract market attention in major countries' stock markets.

Today, the domestic stock market is expected to show limited overall price movement, influenced by earnings announcements from major chemical and financial stocks amid the absence of short-term macro events related to the Federal Reserve. Since the offshore USD/KRW exchange rate is below the 1,200 won level, foreign net buying can be anticipated from a currency perspective. However, LG Energy Solution, which was listed at the end of January, is expected to be included in the secondary battery ETF later this week and in the MSCI index early on the 14th, so residual distortions in supply and demand related to this are expected to continue until that period.

◆ Seo Jeong-hoon, Researcher at Samsung Securities = Last night, the New York stock market closed lower as selling pressure intensified on technology stocks that had recently rebounded in the short term. The U.S. stock market, which showed significant volatility throughout January, had a strong rebound last week. However, Monday's first trading session reflected more caution than continuation of the upward momentum. This was due to ongoing concerns about high inflation and tightening, with the Consumer Price Index (CPI) scheduled for release this Thursday. U.S. Treasury yields showed a pause near recent highs. The dollar index was slightly down, and West Texas Intermediate (WTI) crude oil closed at $91.3, down slightly after seven trading days.

Unlike the sluggish New York market, European markets closed higher. Germany's DAX index rose 0.7%, France's CAC increased 0.8%, and the UK's FTSE index also gained 0.76%. Although European markets declined in January, they have performed relatively well compared to the U.S. market. In particular, the UK has recorded positive returns in both January and February so far.