[Good Morning Stock Market] "Tightening Concerns and Tech Stock Weakness... KOSPI Expected to Start Flat"

Domestic Stock Market Starts Flat After Recent Decline, Outlook by Sector
"Profit-Taking Seen in Stocks with Large Gains Since Early Year"

[Image source=Yonhap News]

The domestic stock market is expected to start flat on the 8th. Although technology stocks underperformed in the U.S. stock market, the domestic market is anticipated to show a stock-specific trend as recent declines have been prominent.

On the 7th (local time), the U.S. stock market closed mixed due to concerns over prolonged tightening and weakness in technology stocks. The Dow Jones Industrial Average rose 57.54 points (0.17%) to close at 34,500.73, while the large-cap-focused S&P 500 fell 14.34 points (0.32%) to 4,451.14. The tech-heavy Nasdaq dropped 123.64 points (0.89%) to finish at 13,748.83.

Stronger-than-expected economic indicators have heightened caution regarding tightening. International oil prices and government bond yields remain at high levels. According to the U.S. Department of Labor, initial jobless claims last week were 216,000, down 13,000 from the previous week. This is the lowest in seven months and below Wall Street expectations. Continuing claims, which represent those claiming unemployment benefits for at least two weeks, decreased by 40,000 to 1.68 million compared to the previous week.

Additionally, investment sentiment toward technology stocks worsened as Apple’s stock fell due to China’s ban on iPhones. Chinese authorities reportedly instructed government officials in public institutions not to use or bring foreign brand devices, including iPhones, to work several weeks ago. Reports also suggest signs of expanding this measure to public institutions and state-owned enterprises.

These factors are expected to weigh on the domestic stock market. However, due to the recent declines, a flat start is anticipated. Seosangyoung, Head of Media Content at Mirae Asset Securities, said, "The ongoing issue of the Chinese government banning the use of foreign devices such as Apple iPhones, which caused declines centered on the Nasdaq, is a burden on the domestic stock market." He added, "Especially, the Philadelphia Semiconductor Index fell 1.98% and the Russell 2000 Index dropped 0.99%, both indices that significantly impact the domestic market, which also contributed to weakened investor sentiment."

He continued, "What is noteworthy here is that stock groups that had large gains since the beginning of the year are reacting sensitively to these negative factors," and "Ultimately, the global stock markets, including the U.S., appear to be realizing profits mainly in stock groups that had significant gains since the start of the year."

Seosangyoung also said, "Considering this trend, the domestic stock market is expected to start flat despite the weak U.S. market due to recent declines," adding, "Subsequently, a differentiated stock market is expected to progress, focusing on semiconductors, Apple parts stocks, and pharmaceutical bio sectors."

Han Jiyoung, a researcher at Kiwoom Securities, stated, "With weakened investment sentiment in technology stocks leading to a likely decline at the start, a thematic market driven by positive factors in individual sectors such as nuclear power, shipbuilding, and bio is expected to continue."