[Good Morning Market] KOSPI Expected to Start Higher Amid Strong US Stock Market

Rising Sentiment in Domestic Stock Market Amid Strong 2nd Battery-Related Stocks
Kospi Expected to Range Between 2330 and 2430 This Week

[Asia Economy Reporter Jang Hyowon] The KOSPI is expected to start with an increase of around 0.3%, supported by the strong performance of the US stock market last week.

On the 13th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,302.61, up 112.64 points (0.33%) from the previous session. The Standard & Poor's (S&P) 500 index rose 15.92 points (0.40%) to 3,999.09, and the Nasdaq index closed at 11,079.16, up 78.05 points (0.71%).

Investors on the New York stock market focused on fourth-quarter bank earnings and economic indicators. The largest US bank, JP Morgan, reported earnings exceeding expectations due to increased net interest income from interest rate hikes. Bank of America (BoA) also posted strong results, leading to a rise in its stock price.

The improvement in the University of Michigan's consumer sentiment index for January also stimulated investor sentiment. The January consumer sentiment index was provisionally recorded at 64.6, up from 59.7 last month.

Among individual stocks, Tesla announced vehicle price cuts in the US and Europe, and although concerns over earnings to be announced on the 25th caused its stock to plunge more than 6% at one point, it closed near flat supported by rebound buying.

Tesla's price cuts were interpreted as an electric vehicle price war, causing GM, Ford, and Rivian to weaken. On the other hand, expectations that such price competition will expand the electric vehicle industry led to gains in secondary battery sectors such as QuantumScape and charging companies like Blink Charging.

On the day, the Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) rose 0.74%, and the MSCI Emerging Markets Index ETF increased by 0.66%. Eurex KOSPI200 futures also rose 0.32%. Accordingly, the KOSPI is expected to start with an increase of around 0.3%.

Seosangyoung, a researcher at Mirae Asset Securities, analyzed, "The New York stock market's shift to an upward trend supported by improved consumer sentiment indicators will have a positive impact on the domestic stock market. In particular, Tesla's price cuts have strengthened the secondary battery sector, increasing the possibility of gains in related stocks, which is also favorable."

Researcher Seosangyoung added, "Furthermore, although US corporate earnings are expected to remain sluggish in the first and second quarters of this year following the fourth quarter of last year, the possibility of improvement in the third and fourth quarters is highlighted, which is rather positive. However, concerns over poor earnings in the first half may increase valuation burdens, so the domestic stock market is expected to show a process of digesting selling pressure after starting with gains."

Han Jiyoung, a researcher at Kiwoom Securities, forecasted this week’s domestic stock market, saying, "It will be influenced by Federal Reserve events such as speeches by major Federal Reserve Bank presidents, the Beige Book, key US real economy indicators, the Bank of Japan (BOJ) monetary policy meeting, and earnings results of major US companies such as Goldman Sachs and Netflix." She added, "This week is expected to enter a consolidation phase, with the KOSPI moving between 2,330 and 2,430 points."