[Good Morning Market] US Stock Market Financials Down, Tech Up... KOSPI Expected to Start Up 0.5%

As news spread that the United States' largest brokerage firm, Charles Schwab, is experiencing a liquidity crisis, financial stocks broadly underperformed in the U.S. stock market overnight. However, thanks to the perception that the Federal Reserve's (Fed) interest rate hikes are nearing their end, technology stocks showed clear strength and closed with a rebound.

[Image source=Yonhap News]

On the 30th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,859.03, up 141.43 points (0.43%) from the previous session. The Standard & Poor's (S&P) 500 index rose 23.02 points (0.57%) to 4,050.83, and the Nasdaq index closed at 12,013.47, up 87.24 points (0.73%). This marks the first time in about a month and a half since last month’s 15th that the Nasdaq index closed above 12,000.

Morgan Stanley downgraded its investment rating and target price for Charles Schwab, leading to a 4.96% decline in Charles Schwab’s stock price. Large bank stocks such as Bank of America (-1.29%) and Wells Fargo (-1.55%) also showed overall weakness amid concerns over increased U.S. government regulations and economic slowdown. However, despite a series of incidents including the recent Silicon Valley Bank (SVB) bankruptcy, the government authorities’ proactive response has eased concerns about the banking system.

The KOSPI is expected to start with an increase of around 0.5%. Seo Sang-young, Head of Media Content at Mirae Asset Securities, said, "With the U.S. stock market continuing its upward trend on expectations that the Fed’s interest rate hike cycle is ending, the Philadelphia Semiconductor Index’s 1.62% rise is expected to act as a positive factor for the Korean stock market following the previous day." However, he added, "The continued weakness in the banking sector and concerns about an economic recession due to reduced lending remain burdens." He further noted, "Historically, thematic trading tends to unfold during such times, so thematic rotation is expected to continue today as it did yesterday. The Korean stock market is expected to start higher, with differentiated trends among stocks and sectors."