[Good Morning Stock Market] US Bank Stocks Rally... KOSPI Expected to Start Higher

With bank stocks showing strength in the U.S. New York stock market, the KOSPI is also expected to start on an upward trend.

On the 21st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,560.60, up 316.02 points (0.98%) from the previous session. The Standard & Poor's (S&P) 500 index rose 51.30 points (1.30%) to 4,002.87, and the Nasdaq index closed at 11,860.11, up 184.57 points (1.58%) from the previous session.

[Image source=Yonhap News]

On this day, the New York stock market was driven by gains in bank stocks. U.S. Treasury Secretary Janet Yellen stated that she is prepared to provide additional guarantees on deposits if the banking crisis worsens, easing concerns about regional banks.

As a result, the stock price of First Republic Bank, which had been caught up in crisis rumors following the collapse of Silicon Valley Bank (SVB), surged more than 50% intraday. Tesla also showed strength after Moody's upgraded its credit rating from junk status to investment grade, and Alphabet rose on news that it is officially launching beta testing of its AI chatbot Bard.

On the same day, the Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) rose 0.54%, and the MSCI Emerging Markets Index ETF increased by 0.9%. Accordingly, the KOSPI is expected to start the session with an increase of around 0.5%.

Seosangyoung, a researcher at Mirae Asset Securities, analyzed, "The positive remarks by Treasury Secretary Yellen on the U.S. banking system and comments that the mass withdrawal situation is stabilizing, which led to strength in financial stocks, will have a favorable impact on the domestic stock market." He added, "Ahead of the U.S. Federal Open Market Committee (FOMC) meeting, the CME FedWatch tool reflects a high probability of a 25 basis point (1bp=0.01 percentage point) rate hike in March, exceeding 80%, indicating a strong likelihood of a rate increase. The market is expected to remain resilient while paying close attention to Federal Reserve Chairman Jerome Powell's remarks."

It is analyzed that the Federal Reserve is likely to suggest a pause in rate hikes at the March meeting by emphasizing the need for financial stability.

Han Ji-young, a researcher at Kiwoom Securities, said, "Although caution and a wait-and-see attitude will continue around the FOMC results today, the market is expected to show an upward trend supported by Treasury Secretary Yellen's calming remarks and the sharp drop in the won-dollar exchange rate." She added, "Investor sentiment toward domestic bank stocks is also expected to improve, and the rise in Tesla is likely to have a positive impact on the supply and demand of domestic automobile and electric vehicle-related stocks."

Meanwhile, the one-month non-deliverable forward (NDF) won-dollar exchange rate in New York the previous day was 1,301.2 won. Reflecting this, the won-dollar exchange rate is expected to start the day down by 11 won.