[Good Morning Stock Market] "Expecting KOSPI to Start Higher on Easing US-China Tensions"

Strong Close of US Semiconductor Stocks is Positive
Reduced Gains in Chinese Stock Market Close is a Concern

[Image source=Yonhap News]

The domestic stock market is expected to start slightly higher on the 29th. This is due to growing expectations that tensions between the U.S. and China will ease after their commerce ministers held talks and agreed to establish a framework for exchanging information related to export controls on semiconductors and other items.

On the previous day (local time), the Dow Jones Industrial Average closed at 34,559.98, up 213.08 points (0.62%) from the previous session in the New York stock market. The S&P 500, focused on large-cap stocks, rose 27.6 points (0.63%) to 4,433.31, and the tech-heavy Nasdaq index gained 114.48 points (0.84%) to close at 13,705.13.

According to foreign media, the U.S. and Chinese commerce ministers held talks in Beijing and agreed to form a deputy-level consultative body to resolve trade and investment issues between the two countries. The meetings will be held twice a year, with the first meeting scheduled to take place in the U.S. early next year. They also agreed to exchange information related to export controls on semiconductors and other products.

With U.S. Treasury Secretary Janet Yellen and U.S. Secretary of State Antony Blinken visiting China, the commerce ministers' talks have raised visible hopes for easing U.S.-China tensions. As a result, certain semiconductor stocks that could benefit, such as Micron (+2.50%) and Nvidia (+1.78%), as well as companies with significant sales in China like Starbucks (+1.63%), showed clear strength in the U.S. stock market.

Nvidia initially fell more than 2% early in the session but successfully reversed to a gain following recent earnings reports that suggested its stock price was not high relative to its corporate value. Additionally, the highlighted expectations of easing tensions from the U.S.-China talks contributed to the upward trend. In recent earnings announcements, Nvidia mentioned that GPU export restrictions would have no short-term impact but could have significant long-term effects.

The Korean stock market is also expected to be influenced by the easing of U.S.-China tensions and developments in the Chinese stock market. Concerns over China's economic slowdown weigh on the KOSPI. The previous day, the Chinese stock market opened more than 5% higher on news of government stimulus policies but ultimately rose only 1.1% due to profit-taking. This indicates that market participants remain skeptical about the Chinese government's stimulus measures.

Seo Sang-young, head of the Media Content Division at Mirae Asset Securities, said, "The Korean stock market is expected to rise slightly as the reduced gains in the Chinese stock market and the possibility of further interest rate hikes by the U.S. Federal Reserve act as burdens, while hopes for easing U.S.-China tensions collide." He added, "We expect a stock market characterized by changes according to individual stock issues."