[Good Morning Market] Despite US Stock Decline, 'China Stimulus' Boosts Market

On the 17th, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. On that day, the KOSPI index opened at 2603.58, up 7.00 points (0.27%) from the previous trading day. The won-dollar exchange rate started at 1280 won, down 4.1 won. Photo by Moon Honam munonam@

[Asia Economy Reporter Hwang Junho] Last night, the New York stock market showed a sharp decline due to concerns over deteriorating corporate earnings caused by inflation. The domestic stock market is expected to weaken, mainly in technology stocks, following the U.S. market's influence. However, there is cautious speculation that the direction may differ depending on the impact of the Chinese stock market influenced by China's economic stimulus measures.

On the 24th (local time), the decline in the U.S. stock market was led by Snap from the previous day. Snap's shares fell more than 43% after announcing that its sales and profits for this quarter would fall short of expectations. Following Snap, Meta dropped 8%, Alphabet 5%, and Amazon 3.2% respectively.

The U.S. new home sales data released that day also showed a 17% decrease, which further widened the stock market's decline. Along with concerns over worsening corporate earnings due to inflation, the reduction in consumer spending increased fears of a recession, causing the Nasdaq to fall more than 4% at one point. However, as immunity to recession fears revived, the U.S. stock market closed slightly down (Dow 0.15%, Nasdaq -2.35%, S&P 500 -0.81%, Russell 2000 -1.56%).

Min Geun Lee, a researcher at Korea Investment & Securities' Active Solution Sales Department, analyzed, "Technology stocks plunged sharply due to Snap's earnings warning, continuing a gloomy market. The Dow's rise showed how relatively weak investor sentiment toward technology stocks was."

The domestic stock market is also expected to follow the trend of the U.S. stock market that day. In particular, the movement of the Chinese stock market due to China's economic stimulus measures announced the previous day is expected to have a positive impact on the domestic stock market.

However, Sangyoung Seo, head of the Media Content Division at Mirae Asset Securities, stated, "The Nasdaq's tendency to stabilize in the latter part of the session is positive for the Korean stock market," adding, "The KOSPI is expected to start with an increase of around 0.5%." He further noted, "Concerns about a recession that affected the domestic stock market the previous day have already been digested in the market."