Overnight, the U.S. stock market closed higher as concerns over Federal Reserve (Fed) tightening eased due to weak employment data. The KOSPI is also expected to start slightly higher on the 31st.
On the 30th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,890.24, up 37.57 points (0.11%) from the previous trading day. The Standard & Poor's (S&P) 500 index rose 17.24 points (0.38%) to 4,514.87, and the Nasdaq index gained 75.55 points (0.54%) to close at 14,019.31. All three major indices have risen for four consecutive trading days.
On that day, news that U.S. private employment and gross domestic product (GDP) slowed more than expected served as a catalyst for the stock price increase. Ahead of the Labor Department's employment report scheduled for the 1st of next month, the ADP employment data, which shows private sector employment, fell short of expectations, strengthening the view that the labor market is slowing faster than anticipated. Private sector employment in August increased by only 177,000 compared to the previous month, below the market expectation of a 200,000 increase.
The preliminary estimate of the U.S. economic growth rate for the second quarter (April to June) released that day also fell short of both the initially announced flash estimate and market expectations. The U.S. Department of Commerce reported that seasonally adjusted GDP for the second quarter increased by 2.1% quarter-on-quarter. This is below the previously announced flash estimate (2.4%) and market expectations (2.4%).
Among individual stocks, Apple (1.92%), ahead of its new iPhone unveiling event on the 12th of next month, showed an upward trend. Micron (2.11%), Alphabet (1.06%), and Nvidia (0.98%) also closed higher.
The KOSPI index is expected to start with an increase of around 0.3%. Seo Sang-young, head of the Media Content Division at Mirae Asset Securities, said, "Although the U.S. stock market saw limited gains despite dollar weakness and falling interest rates due to weak employment data, the process of digesting sell-offs is a burden on the Korean stock market." He added, "Especially, the continuous release of weak indicators could trigger concerns about a U.S. economic contraction." However, he noted, "The results of the manufacturing and services PMI released by the Chinese National Bureau of Statistics could raise expectations for additional stimulus in China, which is favorable." Considering this, he forecasted, "The Korean stock market is expected to start with a rise of around 0.3%, then fluctuate depending on the results of the U.S. employment report and changes in the Chinese stock market caused by economic indicators released during the trading session."
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