[Good Morning Stock Market] Dollar Index Falls Alongside Sharp Drop in US Treasury Yields... Favorable for Domestic Market

[Image source=Yonhap News]

The KOSPI is expected to start slightly higher on the 29th.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 35,416.98, up 83.51 points (0.24%) from the previous session. The Standard & Poor's (S&P) 500 index rose 4.46 points (0.10%) to 4,554.89, and the Nasdaq index closed at 14,281.76, up 40.73 points (0.29%) from the previous session.

The New York stock market continued its upward trend following dovish remarks from Federal Reserve (Fed) officials. Christopher Waller, a Fed governor known as a hawk within the Fed, stated that "confidence is growing that the current monetary policy stance is appropriate to slow the U.S. economy and bring inflation back to 2%." The market interpreted this as signaling the end of the Fed's rate hikes.

Fueled by this sentiment, the New York stock market opened higher but saw gains narrow due to cautious sentiment ahead of key economic data releases such as the PCE inflation and ISM manufacturing index. However, Tesla showed a strong gain of over 4%, buoyed by Wall Street's positive reviews ahead of the official delivery of the Cybertruck on the 30th.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) rose 1.49%, and the MSCI Emerging Markets Index ETF increased by 0.84%. Eurex KOSPI 200 futures fell 0.25%. Considering this, the KOSPI is expected to start the day up by 0.2 to 0.4%.

Seokhwan Kim, a researcher at Mirae Asset Securities, analyzed, "The KOSPI surpassed the 2,500 level, which had fluctuated for five consecutive trading days, supported by foreign investors' net buying of futures and institutions' arbitrage trading." He added, "For a sustained upward trend, foreign investors' net buying of spot stocks needs to continue." He also noted, "The sharp drop in the U.S. 2-year Treasury yield and the dollar index falling to its lowest level since last August are expected to create a favorable supply-demand environment for the domestic stock market."

Jiyoung Han, a researcher at Kiwoom Securities, commented, "Having broken through the resistance level of 2,504 in November, the key technical focus until the end of the year is whether the KOSPI can surpass the long-term trend line at 2,597." She added, "Since the current valuation burden is not significant, it is expected that the index will successfully settle above the long-term trend line soon." However, she cautioned, "With the earnings season over, the market has entered a phase of exploring earnings direction. Attention should be paid to uncertainties surrounding a potential U.S. recession and major macro events such as the December FOMC meeting during the remaining period of the year." She further explained, "Rather than breaking through the 2,600 level in a short period, the market is likely to experience intermittent consolidation phases and sector-specific rallies." She concluded, "At the current level, it is appropriate to assume a base scenario where the index gradually raises its lows while attempting to break through the 2,600 level."