[Good Morning Market] US Stock Market Nears Previous Highs... KOSPI Expected to Take a Breather

[Image source=Reuters Yonhap News]

As global stock markets, led by the United States, recorded a three-week consecutive surge, the KOSPI is expected to start lower on the 20th due to fatigue from the short-term rally and other factors.

On the 17th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,947.28, up 0.01% (1.81 points) from the previous day. The Standard & Poor's 500 (S&P 500) index rose 0.13% (5.78 points) to 4,514.02, and the Nasdaq index closed at 14,125.48, up 0.08% (11.81 points).

The U.S. stock market posted its longest rally since July, closing higher for three consecutive weeks. The S&P 500 and Nasdaq indices rose more than 2% over the week, while the Dow increased about 1.9%. The S&P 500 showed gains for four consecutive trading days, reaching its highest level since August 30. The Nasdaq also rose for four straight days, marking its highest closing level since August 1.

By sector, six out of the 11 S&P 500 sectors advanced. The energy sector rose 2.12% from the previous day, supported by higher oil prices. However, communication services recorded the largest decline, falling 0.47%. Additionally, financials, industrials, materials, and utilities indices rose, while health care, real estate, technology, and communication indices closed lower.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 0.84%, while the MSCI Emerging Markets ETF rose 0.13%. Eurex KOSPI 200 futures dropped 0.06%. Accordingly, the KOSPI is expected to open down by about 0.2% to 0.5%.

Lee Kyung-min, a researcher at Daishin Securities, said, "Uncertainty factors that have suppressed global stock markets, including the KOSPI, have rapidly eased this month," adding, "The upward trend is expected to continue through the end of the year, supported by stable declines in bond yields and the U.S. dollar." However, he cautioned, "There is a possibility of a short-term pause," noting, "The S&P 500 and Nasdaq have surged 9.63% and 12.14%, respectively, approaching previous highs, and the KOSPI has risen 8.4%, closely approaching the 200-day moving average trendline, indicating increased fatigue from the short-term rally."

Kim Seok-hwan, a researcher at Mirae Asset Securities, stated, "At the end of last month, the annual cumulative net buying by foreigners decreased to 4.7 trillion won, the lowest level since the end of January, but strong buying inflows have returned this month, expanding again to 7.9 trillion won as of the 17th." He added, "Excluding Samsung Electronics, foreigners have a net selling position of 450 billion won for the year, indicating a less positive view of the domestic stock market by foreign investors, which could be a concern for domestic investors."

Meanwhile, the one-month non-deliverable forward (NDF) USD/KRW exchange rate in New York stood at 1,293.4 won, reflecting an expected 4 won decline in the USD/KRW exchange rate at the opening.