[Good Morning Stock Market] US Stocks Close Lower... Will KOSPI Rebound Centered on Tech and Reopening Stocks?

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myung-hwan Lee] On the 20th, the domestic stock market is expected to start higher and then rebound, according to securities industry forecasts. Although the U.S. stock market closed lower amid increased volatility the previous day, the Nasdaq index, centered on technology stocks, managed to turn positive intraday, which is seen as a positive sign. The fact that the U.S. and Russia have initiated communication, raising hopes for a resolution to the Ukraine war, is also expected to be favorable for reopening-related stocks. Additionally, the weakening of the U.S. dollar is analyzed to be positive for foreign investor demand.

On the 19th (local time), the Dow Jones Industrial Average closed at 31,253.13, down 236.94 points (0.75%) from the previous session. The large-cap S&P 500 index fell 22.89 points (0.58%) to 3,900.79, and the Nasdaq index dropped 29.66 points (0.26%) to 11,388.50.

Sang-young Seo, Head of Media Content Division at Mirae Asset Securities: "KOSPI expected to start up 0.5%... Technology and reopening stocks expected to strengthen"

On the 20th, the Korean stock market is expected to start with an increase of around 0.5%, with anticipated strength in technology stocks and reopening-related stocks that have recently been oversold.

Although the U.S. stock market fell by about 1%, the strong rebound buying sentiment and the Nasdaq’s intraday shift to positive territory centered on technology stocks are positive for the Korean stock market. In particular, Nvidia, whose target price was revised downward but is currently trading higher, is showing an upward trend, indicating a continued rebound from oversold conditions. Of course, the gradual easing of supply chain concerns caused by China's lockdowns, which led to Cisco’s sharp decline, is also expected to have a positive impact.

The fact that the Ukraine situation has entered a resolution mode through communication between the U.S. and Russia is also positive for improving investor sentiment. Especially, this has led to sector differentiation, with the defense industry underperforming but the travel sector showing strength, raising expectations for the strength of reopening-related stocks in the Korean market as well. Additionally, the sharp weakening of the U.S. dollar is expected to cause the won-dollar exchange rate to start down by 15 won, which is also favorable for foreign investor demand.

Ji-young Han, Researcher at Kiwoom Securities: "Weakening U.S. dollar positive for foreign investor demand... Domestic stock market expected to rebound"

On the 20th, despite ongoing volatility in the U.S. stock market and concerns about U.S. economic slowdown, the domestic stock market is expected to rebound, supported by expectations of earnings improvements in some companies including secondary battery stocks, and the relative valuation attractiveness compared to other markets.

The weakening of the U.S. dollar has caused the won-dollar exchange rate in offshore markets to drop by more than 10 won, alleviating the overshooting of won weakness, which is also judged to be positive for market demand. During the day, the People’s Bank of China’s decision on the Loan Prime Rate (LPR) is expected to influence Asian markets including the Chinese stock market, so market attention will continue to focus on whether they will cut interest rates.