The domestic stock market this week (4th to 8th) is expected to remain cautious and show a wait-and-see stance amid concerns about inflation, economic trends, and exchange rates.
Last week, the KOSPI closed at 2,505.1, up 8.38 points (0.34%) from the previous week. Despite the decline in U.S. Treasury yields and a weaker dollar, the KOSPI appeared to be taking a breather. As the year enters its final month, the cautious sentiment ahead of major economic indicator announcements is also analyzed as a factor limiting the market's upside. By sector, battery cell companies such as LG Energy Solution and Samsung SDI showed weakness.
During the same period, the KOSDAQ index ended at 827.24, up 12.24 points (1.50%). Unlike the KOSPI, it showed a steady rise supported by strength in secondary battery-related stocks.
In the securities industry, expectations for the so-called 'Santa Rally' are emerging as the year-end approaches. Lee Hyuk-jin, a researcher at Samsung Securities, said, "Financial conditions are showing signs of easing, and export indicators are rebounding," adding, "We expect a moderate Santa Rally until the end of the year." However, he noted, "There was a sharp index rebound until November, and with the December Federal Open Market Committee (FOMC) meeting approaching, the Fed officials will enter a blackout period," forecasting, "In the absence of special momentum, the pace of stock market gains will be moderate."
On the other hand, caution remains regarding further rises in the stock market, which has recently continued its upward trend. Shinhan Investment Corp.'s investment strategy department said in its December outlook, "Despite seasonal expectations for a Santa Rally, we maintain a cautious view," pointing out, "There is a lack of confidence in the paths of the economy and inflation, and potential inflationary risks remain." They added, "It is necessary to confirm expectations for a recovery in global manufacturing and semiconductor sectors and adopt a gradual overweight strategy."
NH Investment & Securities suggested a weekly expected band for the KOSPI next week of 2,450 to 2,570 points. Disinflation and Korea's strong exports were cited as upward factors, while reduced expectations for interest rate cuts and concerns about short-term overheating of stock market investor sentiment were cited as downward factors.
Researcher Na Jeong-hwan of NH Investment & Securities said, "The confirmation of disinflation, such as the continued downward trend in U.S. inflation indicators, supports accommodative monetary policy, but the recently overly expanded expectations for a Fed pivot on rate cuts may rather be reduced." He added, "With U.S. Treasury yields having fallen significantly from their peaks, further declines in Treasury yields leading to stock price increases are judged to be limited," but noted, "Expectations for the semiconductor sector remain valid due to the momentum effect of the AI industry."
Key schedules this week include the release of Korea's November Consumer Price Index and the finalized third-quarter Gross Domestic Product (GDP) figures on the 5th. Additionally, the U.S. November employment report is scheduled for release on the 8th. A major political event is the EU-China summit scheduled for two days starting on the 7th.
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