[Good Morning Stock Market] Apple Market Cap Surpasses $3 Trillion... Will It Act as Momentum for KOSPI?

[Image source=Yonhap News]

As Apple surpassed a market capitalization of $3 trillion, the U.S. stock market closed higher, led by large-cap stocks.

On the 30th (Eastern Time), the Dow Jones Industrial Average on the New York Stock Exchange (NYSE) closed at 34,407.60, up 0.84% (285.18 points) from the previous session. The Standard & Poor's (S&P) 500 index rose 1.23% (53.94 points) to 4,450.38, and the Nasdaq closed at 13,787.92, up 1.45% (196.59 points).

Apple (2.31%) rose after Citibank initiated coverage with a buy rating and a target price of $240, pushing its market capitalization above $3 trillion for the first time based on closing price. However, UBS noted that iPhone sales declined by 2% year-over-year in May, marking eight consecutive months of decline, raising concerns about earnings, but the upward momentum continued amid psychological stability. iPhone component suppliers such as Skyworks (0.74%), Qorvo (0.68%), and Qualcomm (0.83%) also rose, though gains were limited. Nvidia (3.63%) showed strength after Daiwa upgraded its investment rating from neutral to overweight, citing its dominant position in the AI industry, and raised the target price from $408 to $475.

The U.S. stock market's rise, supported by easing inflation and growing confidence in the economy, is expected to have a positive impact on the Korean stock market as well. However, the fact that UBS announced eight consecutive months of slowing iPhone sales for Apple, which surpassed a $3 trillion market cap, and the analysis that Micron's inventory improvement pace is slowing, which led to declines, are burdens. Although the Philadelphia Semiconductor Index rose due to strength in Nvidia and others, the Russell 2000 Index, Dow Jones Transportation Index, and even Korea's June trade index recorded less-than-expected gains, suggesting that the Korean stock market is expected to start with a slight rise but will likely undergo a process of digesting selling pressure.

[Image source=EPA Yonhap News]

Sangyoung Seo, Head of Media Content at Mirae Asset Securities: “KOSPI Will Go Through a Process of Digesting Selling Pressure”

Today, the KOSPI is expected to start with an increase of around 0.5%.

Last Friday, the Korean stock market opened lower due to pressure from weak U.S. tech stocks but turned higher as China's June Manufacturing Producer Price Index (PMI) showed slight improvement, positively influencing market sentiment about the economy. However, foreign investors bought Samsung Electronics shares worth 41.7 billion KRW but sold 178.4 billion KRW net in the Korean market, which is a burden. Nearly 5,000 futures contracts were net bought, triggering program buying by institutional investors and driving the index higher. As a result, the KOSPI closed up 0.56%, and the KOSDAQ rose 0.75%.

Meanwhile, the rise in the U.S. stock market, supported by easing inflation and growing confidence in the economy, is expected to positively influence the Korean stock market. Also, despite a slowdown in personal consumption expenditures, sentiment indicators remain robust, increasing risk asset preference, which is positive.

However, the announcement by UBS that Apple’s iPhone sales have slowed for eight consecutive months despite its market cap exceeding $3 trillion, and the analysis that Micron’s inventory improvement pace is slowing, which led to declines, remain burdens. Although the Philadelphia Semiconductor Index rose 1.63% due to strength in Nvidia and others, the Russell 2000 Index rose only 0.38%, and the Dow Jones Transportation Index increased just 0.07%, which are burdens.

Additionally, Korea’s June trade balance returned to a surplus of $1.1 billion for the first time since February 2022, but exports fell 6.0% and imports decreased 11.7%, both below market expectations, which is also a burden. Considering this, the Korean stock market is expected to start with a rise of around 0.5%, but a process of digesting selling pressure is likely as investors await major economic data releases.

[Image source=Reuters Yonhap News]

Jiyoung Han, Researcher at Kiwoom Securities: “Focus on Samsung Electronics’ Q2 Preliminary Earnings... Watch for Momentum Formation in the Stock Market”

As the stock market enters a phase of sensitive reactions to indicators, attention should be paid to whether the June Federal Open Market Committee (FOMC) minutes scheduled for the 6th will intensify uncertainty in the market through disagreements among participants regarding the number of additional rate hikes and the timing of rate hike pauses. The June employment data results on the 7th and the following week may further increase uncertainty in the stock market.

Meanwhile, the dominant view is that the KOSPI’s major listed companies are passing through their earnings trough, and market attention is expected to focus on Samsung Electronics’ preliminary Q2 earnings scheduled for the 7th. After the Q1 earnings announcements in mid-April, momentum was formed as semiconductor stocks, including Samsung Electronics, confirmed their bottom, but since June, the market has entered a pause. If the Q2 earnings release creates an atmosphere that further deterioration in the semiconductor industry will be limited, these sectors’ stock prices could receive another momentum boost.

Also, Korea’s June exports, announced on the 1st, fell 6.0% year-over-year, missing the consensus of -3.0%, but the decline rate narrowed compared to the previous month’s -15.2%, marking the smallest decrease since the beginning of the year, which is a positive factor.

The trade deficit, which had frequently constrained the market’s upside through exchange rate channels such as won depreciation since last year, also turned to a surplus of $1.1 billion for the first time in 16 months, which is positive. Although this week is a period with increasing burdens due to major events, the fundamentals surrounding the Korean stock market having passed the worst phase is expected to maintain downside resilience in the domestic stock market, including this week.