[Good Morning Market] European Stocks Rally... KOSPI Expected to Fluctuate After Rising Start

Positive Manufacturing PMI, European Stocks Rise
New York Stock Market Closed Due to Substitute Holiday
Small and Mid-Cap Stocks with High Retail Trading Show Volatility Adjustments

[Image source=Yonhap News]

[Asia Economy Reporter Jang Hyowon] Following the previous day's strong performance in European stock markets driven by positive manufacturing indicators, the KOSPI is expected to start with a 0.5% gain.

The EUROSTOXX50 index closed at 3856.09, up 62.47 points (1.65%) from the previous trading day. Germany's DAX index rose 145.67 points (1.05%) to 14,069.26, and France's CAC40 index ended the session at 6594.57, up 120.81 points (1.87%). The New York and UK stock markets were closed due to substitute holidays.

The Eurozone's December S&P Global Manufacturing PMI, released the day before, stood at 47.8, meeting expectations and rising from 47.1 in the previous month. Despite manufacturing contraction continuing through December last year due to inflation, economic slowdown, and high energy costs, the decline's intensity eased as production and new orders decreased at their slowest rates since May and June, respectively.

Seosangyoung, a researcher at Mirae Asset Securities, stated, "The European stock market's over 1% rise, supported by stable natural gas prices and growing confidence in the economy, will positively impact the domestic market. Notably, S&P Global announced that the European economy, one of the causes of the global stock market contraction in the second half of last year, is more resilient than expected due to eased supply chain concerns and inflation moderation."

He added, "However, the reversal seen after the European market close, with the dollar strengthening and European natural gas prices surging, poses a burden. Considering this, the KOSPI is expected to start with about a 0.5% rise and then show limited fluctuations."

Han Jiyoung, a researcher at Kiwoom Securities, commented, "The domestic stock market is expected to rebound today, supported by bargain hunting following consecutive price declines since last week and the strong performance of European markets. From an industry perspective, it is notable that major foreign media reported Tesla's full-year electric vehicle deliveries last year (1.31 million units) fell short of both Musk's target (1.4 million units) and market consensus (approximately 1.34 million units)."

This could negatively affect investor sentiment toward domestic secondary battery-related stocks. However, considering that Tesla-related negative factors have largely been absorbed through price adjustments since the end of last year, and that December exports announced on the 1st showed a significant 29.7% year-on-year increase in secondary battery exports, the stock price impact is expected to be limited.

Han added, "It is also important to note that measures such as the easing of credit loan collateral maintenance ratios and suspension of forced sales, implemented as part of market stabilization efforts during the KOSPI crashes in July and September, will be restored to their original state starting this year. Although aggressive forced sales from the first week of the new year are unlikely, it is advisable to prepare for short-term price volatility, especially for small and mid-cap stocks or reopening theme stocks within the KOSPI and KOSDAQ, where individual investors have a large trading share."

Meanwhile, the 1-month New York Non-Deliverable Forward (NDF) KRW-USD exchange rate stood at 1269.0 won, suggesting that the KRW-USD exchange rate is expected to open 5 won lower compared to the previous day.