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

US Stock Market Pauses After Holiday Rally
Tech Stocks Remain Strong, KOSPI Expected to Rise 1.5%

[Asia Economy Reporter Kwangho Lee] The New York stock market showed mixed trends as it digested corporate earnings announcements the previous day. Although it rose during the holiday period on expectations of a slowdown in the pace of interest rate hikes by the U.S. Federal Reserve (Fed), it partially retraced the rebound on the day, showing a pause.

On the 24th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,733.96, up 104.40 points (0.31%) from the previous session. The Standard & Poor's (S&P) 500 index fell 2.86 points (0.07%) to 4,016.95, and the Nasdaq index closed down 30.14 points (0.27%) at 11,334.27.

Within the S&P 500 index, industrials, utilities, real estate, and consumer staples stocks rose, while communication, health care, and energy stocks declined. Alphabet's shares dropped about 2% following news that the U.S. Department of Justice filed an antitrust lawsuit related to Google's digital advertising market practices.

Verizon's shares rose about 2% on news that the company's net profit met expectations. Lockheed Martin's shares rose more than 1% on earnings that exceeded estimates.

[Image source=Yonhap News]

Market participants expect the Fed to raise the benchmark interest rate by 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting.

The MSCI Korea Index ETF fell 0.30% (up 2.61% during the holiday period), and the MSCI Emerging Markets Index ETF rose 0.07% (up 2.41% during the holiday period). Sangyoung Seo, a researcher at Mirae Asset Securities, said that the 1-month NDF won-dollar exchange rate was 1,231.91 won, and reflecting this, the won-dollar exchange rate is expected to start 5 won lower on the 25th, with the KOSPI expected to start about 1.5% higher.

Researcher Seo analyzed, "Although concerns about economic contraction were highlighted in the U.S. stock market during the holiday period, positive factors flowed in, such as the Nasdaq rising over 4% as the possibility of a 25bp hike at the February FOMC increased, which is favorable for the Korean stock market." He added, "In particular, the Philadelphia Semiconductor Index, which affects the Korean stock market, rose 7.5%, and the electric vehicle sector also showed a significant rise, improving investment sentiment for related stocks."

He said, "Expectations for earnings improvement in the second half of this year are emerging, so the decline of companies that announced poor earnings is not spreading across the industry, which is also favorable." He also evaluated, "After the U.S. market closed, Morgan Stanley, which reported poor earnings, rose more than 4% in after-hours trading, and other large tech stocks are also showing strength, which is positive."

Ji-young Han, a researcher at Kiwoom Securities, said, "Although the gap between the Fed and the market regarding interest rate cuts within the year has not yet narrowed, current market participants are postponing the 'interest rate cut within the year' issue and focusing on the 'halt of interest rate hikes within the year' issue, trying to find positive factors here." She predicted, "The domestic stock market will start strong on the 25th, reflecting U.S.-originated positive news during the holiday period."