[Good Morning Stock Market] "US Stock Market Rise Positively Affects Korea" ... Vulnerability in Supply and Demand Remains a Burden

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[Asia Economy Reporter Lee Jung-yoon] The U.S. stock market fell early in the session due to recession concerns. According to the Institute for Supply Management (ISM), the manufacturing Purchasing Managers' Index (PMI) for June stood at 53.0, marking the lowest level since June 2020 (52.4). However, a rebound buying wave emerged, leading to a positive close. On the 1st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 321.83 points (1.05%) from the previous close to 31,097.26. The S&P 500, focused on large-cap stocks, increased by 39.95 points (1.06%) to 3,825.33, and the tech-heavy Nasdaq rose 99.11 points (0.90%) to close at 11,127.

Analysts suggest that the U.S. stock market’s positive close, reflecting the early pricing in of negative factors, could have a favorable impact on the Korean stock market on the 4th. However, with the U.S. June manufacturing PMI falling short of expectations and supply-demand conditions remaining fragile, volatility in the market may persist.

◆ Seo Sang-young, Researcher at Mirae Asset Securities = The Federal Reserve Bank of Atlanta projected the U.S. GDP growth rate for Q2 this year at -2.1%, marking two consecutive quarters of negative growth following Q1. This raised recession concerns, but the stock market’s reflection of this outlook limited the decline in U.S. stocks.

The Atlanta Fed’s GDP forecast is based on the slowdown in U.S. construction spending in May and contraction in the June manufacturing PMI. The slowdown in construction spending is attributed to a 0.4% month-over-month decrease in non-residential construction spending, which represents corporate capital investment, marking three consecutive months of decline. However, by sector, manufacturing increased by 1.2% and transportation by 1.0%, raising expectations for long-term corporate capital investment growth.

Additionally, the June manufacturing PMI declined from 56.1 to 53.0. New orders fell below the baseline for the first time in 25 months, signaling a bleak outlook, but attention should be paid to the easing in the supplier delivery index and price index. This could raise expectations for easing supply chain disruptions and inflation.

The analysis that the U.S. stock market had already priced in negative factors and then turned upward is positive for the domestic market. However, the Atlanta Fed’s GDP outlook remains a burden, and the strong dollar could negatively affect foreign investor flows, warranting close attention.

◆ Seo Jung-hoon, Researcher at Samsung Securities = On the 1st, the U.S. stock market closed higher despite weak economic data, reacting favorably to the decline in market interest rates rather than recession fears. The Philadelphia Semiconductor Index fell 3.83% amid concerns over semiconductor demand. Large tech stocks showed mixed results: Apple rose 1.6%, Microsoft 1.1%, Amazon 3.2%, and Tesla 1.2%, while Alphabet fell 0.3% and Meta 0.8%. Meanwhile, the U.S. June manufacturing PMI dropped 3.1 points from the previous month to 53.0, below the expected 54.5, fueling concerns over economic slowdown.

The U.S. stock market will be closed for Independence Day, and the domestic market is expected to remain cautious. Given fragile supply-demand conditions, preparation for a volatile market environment is necessary.