[Good Morning Market] US Stock Market 'Taking a Breather'... KOSPI Expected to Start with Over 1% Rise

Last night, the New York stock market showed a cautious stance after a sharp rise last week and closed with a slight increase. On the 7th, the KOSPI index is expected to start more than 1% higher.

On the 6th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,095.86, up 34.54 points (0.10%) from the previous session. The S&P 500 index rose 7.64 points (0.18%) to 4,365.98, and the Nasdaq index closed at 13,518.78, up 40.50 points (0.30%) from the previous session.

The Dow Jones index rose 5.07% last week, marking the largest weekly gain since October 2022. The S&P 500 and Nasdaq indices also rose 5.85% and 6.61%, respectively, setting new weekly highs since November 2022. This was influenced by recent remarks from Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), who noted that "the financial environment has tightened significantly," showing a more accommodative stance, which greatly eased market concerns about further tightening. Additionally, strong corporate earnings in the third quarter supported the stock market's rise.

However, it is uncertain whether this upward trend will continue. Barclays recently forecasted that, considering the current financial environment, additional interest rate hikes could occur around January next year. Michael Wilson, Chief Investment Officer (CIO) at Morgan Stanley, known as a pessimistic expert on Wall Street, warned on the same day that "the recent sharp rise in stock prices will disappear within the next one to two weeks." JP Morgan also mentioned in a report that "the stock market rally could be reversed," maintaining that the current 'high interest rate' environment is expected to persist longer than anticipated.

[Image source=Yonhap News]

On this day, the domestic stock market is expected to continue the upward trend from the previous day, rising more than 1% in early trading. The financial authorities announced a complete ban on short selling, which caused the KOSPI index to surge by 134 points (5.66%) the previous day. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "During the first two trading days of November, the domestic stock market rose more than 3% thanks to simultaneous net buying by institutions and foreigners," adding, "In particular, foreign and institutional investors concentrated their purchases on semiconductors, outperforming the index." He continued, "However, regarding the secondary battery sector, foreigners continue to neglect it, with net buying concentrated mainly among domestic institutions," and added, "For sustained and trend-like growth, it is necessary for buying momentum to spread to sectors other than semiconductors."