[Good Morning Stock Market] Tension Over ECB President's Remarks... "KOSPI Expected to Start Flat"

Christine Lagarde, President of the European Central Bank (ECB)
[Image source=Reuters·Yonhap News]

On the 5th, the domestic stock market is expected to start flat and continue to show differentiation among individual stocks.

The U.S. New York Stock Exchange was closed on the 4th (local time) in observance of Labor Day. However, investors paid attention to remarks by Christine Lagarde, President of the European Central Bank (ECB). In a speech at the European Economic and Financial Centre seminar, President Lagarde mentioned difficulties in communication between policymakers and the public due to changes in the media environment. The ECB takes the communication difficulties and declining trust environment seriously and stated that the inflation over the past two years has been very unique.

She also emphasized the importance of decisive measures to reduce inflation and clearly communicating that the inflation rate will return to the 2% target. Although President Lagarde did not make specific comments on monetary policy, this led to a stronger euro and rising government bond yields in various countries.

Sangyoung Seo, Head of Media Content at Mirae Asset Securities, explained, "Meanwhile, the European stock market started higher due to issues such as the Chinese real estate sector but turned lower after digesting related issues, which is a burden on the domestic stock market. However, rather than being a result of any particular issue, the mention by President Lagarde that decisive policies will be implemented to ensure accurate communication has triggered selling pressure, so the impact of the European stock market decline is expected to be limited."

He added, "The better-than-expected German import-export statistics are expected to stimulate positive expectations for the economy. Furthermore, excluding the stock market, the euro showed strength, the dollar and yen weakened, and government bond yields rose, indicating increased risk asset preference, which is favorable. Considering this, the domestic stock market is expected to start flat, and based on changes in the Chinese stock market and continued strength in international oil prices, differentiation among individual stocks is expected to continue."

Ji-young Han, a researcher at Kiwoom Securities, said, "The domestic stock market is expected to start slightly higher, reflecting external upside and downside factors such as the U.S. market closure, weak European stock market, and exchange rate decline. It is expected to continue a differentiated market among sectors such as semiconductors, secondary batteries, and Chinese consumer-related stocks, influenced by the flow of the Chinese stock market."