[Good Morning Stock Market] Mixed Expectations and Concerns for Year-End Shopping Season... KOSPI Starts Slightly Lower

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] On the 28th, the domestic stock market is expected to start slightly lower due to the sluggish performance of Apple-related stocks and the decline of the Philadelphia Semiconductor Index in the previous trading day in the U.S. New York stock market.

On the previous trading day (local time on the 25th), the New York stock market closed mixed amid expectations and concerns about the year-end shopping season on Black Friday. The Dow Jones Industrial Average rose 0.45% (152.97 points) to close at 34,347.03, the Standard & Poor's (S&P) 500 index fell 0.03% (1.14 points) to 4,026.12, and the Nasdaq index dropped 0.52% (58.96 points) to close at 11,226.36.

Despite the news of China's reserve requirement ratio cut, the Nasdaq declined in a differentiated market as Apple (-1.96%) related stocks showed weakness due to concerns over reduced product supply amid the spread of COVID-19 in China. Meanwhile, the mixed expectations and concerns about Black Friday sales led to sector and stock-specific differentiation. As a result, Apple, parts stocks, and semiconductor sectors were weak, while airlines, parts, and healthcare sectors showed strength, closing mixed.

The sluggish performance of Apple and related stocks in the U.S. market due to reduced product shipments amid the spread of COVID-19 in China is expected to weigh on our stock market as well. Furthermore, the Philadelphia Semiconductor Index fell 1.26%, and the won-dollar exchange rate is expected to start about 10 won higher, adding pressure from foreign investor supply and demand instability due to won depreciation.

However, the fact that the People's Bank of China has begun to take measures to control economic contraction by cutting the reserve requirement ratio by 25 basis points and that Black Friday sales exceeded expectations are positive factors. Considering this, our stock market is expected to start about 0.3% lower and continue to absorb selling pressure.

Seo Sang-young, Head of Media Content at Mirae Asset Securities: "Apple-related stocks sluggish, Philadelphia Semiconductor Index decline... KOSPI expected to start about 0.3% lower"

[Image source=Yonhap News]

Today, our stock market is expected to start with the KOSPI index down about 0.3%.

Last Friday, the Korean stock market fell as profit-taking selling emerged despite global central banks signaling a slowdown in interest rate hikes. Although volatility in the won-dollar exchange rate and overall financial market anxiety, including the foreign exchange market, remain, limited rebound buying sentiment due to expectations of China's economic stimulus measures led to a mixed range. As a result, last Friday, the KOSPI closed down 0.14%, and the KOSDAQ fell 0.63%.

Among these, the sluggish performance of Apple and related stocks in the U.S. market due to reduced product shipments amid the spread of COVID-19 in China is expected to weigh on our stock market. Additionally, the 1.26% decline in the Philadelphia Semiconductor Index is also a burden. Moreover, despite the weak dollar, the won-dollar exchange rate is expected to rise about 10 won, adding to foreign investor supply and demand instability due to won depreciation. However, except for semiconductors and Apple parts stocks, most sectors showed strength, which is expected to have a positive impact, limiting the extent of the decline.

The fact that the People's Bank of China has begun to take measures to control economic contraction by cutting the reserve requirement ratio by 25 basis points is positive. Furthermore, Black Friday sales, which were expected to shrink due to high inflation and Fed rate hikes, exceeded expectations, which is also positive. Market participants are expected to take limited rather than aggressive actions while awaiting Fed Chair Powell's remarks on monetary policy and economic outlook scheduled for the 30th, as well as the Fed's Beige Book. Considering this, our stock market is expected to start about 0.3% lower and continue to absorb selling pressure following last Friday.

Han Ji-young, Researcher at Kiwoom Securities: "Range-bound market rather than downside"

Our stock market is expected to enter a phase of directional exploration influenced by Black Friday shopping results, U.S. ISM manufacturing PMI and non-farm payrolls, Korean exports, remarks by Fed Chair Powell and other Fed officials, and the impact of China's reserve requirement ratio cut.

The weekly expected range for the KOSPI is 2,380 to 2,500 points.

On the previous trading day (local time on the 25th), the U.S. stock market closed mixed, but considering the sharp drop in trading volume due to early market closure and cautious sentiment, it is judged that there was no significant price movement. What the market should now focus on is the Black Friday shopping season results, which will determine the short-term price direction of U.S. big tech, retail, as well as Korean IT sectors such as home appliances and displays.

Attention should be paid to the Black Friday shopping results. The National Retail Federation optimistically forecasts about 170 million shoppers during this Black Friday, the highest since 2017, but it is necessary to consider the decline in real purchasing power due to inflation. Moody's analyzed that the average monthly consumption amount of U.S. households, reflecting the October Consumer Price Index (CPI), will slow to about $433 from $445 in September. However, since the stock market tends to move based on changes in expectations rather than current conditions, if data is better than concerns, the stock market environment is expected to be favorable.

Additionally, depending on various economic indicators such as Korean exports and U.S. ISM manufacturing PMI, there is a possibility of rebound momentum in major sectors like semiconductors and secondary batteries.

Therefore, it seems appropriate to respond assuming a range-bound market rather than a downward trend in our stock market.