[Good Morning Stock Market] US Stocks Rise on Economic Confidence... KOSPI Expected to Start Up 0.7%

On the 2nd (local time), the US stock market showed strength as confidence in the economy was reflected following a significant increase in nonfarm payrolls. With the US debt ceiling issue also resolved, the KOSPI index is expected to start the day with an increase of around 0.7% on the 5th.

On the 2nd at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,762.76, up 701.19 points (2.12%) from the previous session. The Standard & Poor's (S&P) 500 index rose 61.35 points (1.45%) to 4,282.37, and the Nasdaq index ended at 13,240.77, up 139.78 points (1.07%) from the previous session.

The main reason for the strong performance of the US stock market was the significant increase in nonfarm payrolls last month. According to the US Department of Labor, nonfarm employment increased by 339,000 in May, far exceeding market expectations of a 190,000 increase. Additionally, the slowdown in hourly wages across most sectors positively influenced investor sentiment. Regarding the US debt ceiling issue, which had previously caused market turmoil, the debt ceiling increase bill passed the US Senate late on the night of the 1st, resolving uncertainties.

President Joe Biden of the United States
[Photo by Yonhap News]

With the robust US employment data restoring confidence in the economy, sectors related to the economy such as materials, energy, and industrials showed clear strength. However, due to rising Treasury yields, the semiconductor sector, which had seen significant price gains, underperformed, and gains in large tech stocks were also limited, showing a differentiated trend. Semiconductor-related companies like Nvidia and AMD fell by 1.11% and 1.35%, respectively. 3M rose 8.75% as the employment report reflected economic confidence. Additionally, bank stocks such as JPMorgan (2.10%) and Western Alliance (10.8%) also increased.

The positive outlook on the US economy is expected to have a favorable impact on the domestic stock market as well. However, the weakness in major semiconductor-related stocks and the 0.15% decline in the Philadelphia Semiconductor Index remain concerns. Attention is also focused on China's Caixin Services Purchasing Managers' Index (PMI), which will be released on the same day.

Seo Sang-young, head of the Media Content Division at Mirae Asset Securities, said, "(The decline in semiconductor stocks in the US market) is due to profit-taking rather than negative factors, so a process of absorbing selling pressure on related stocks is expected in the Korean stock market as well." He added, "If China's Caixin Services PMI is weak, the desire for profit-taking could increase further." He continued, "Considering this, the Korean stock market is expected to start with an increase of around 0.7%, then show steady performance while focusing on Chinese economic indicators and foreign investor flows."