[Good Morning Stock Market] US 10-Year Treasury Yield, Exchange Rate Favorable... "KOSPI Expected to Rise"

[Image source=Yonhap News]

On the 15th, the Korean stock market is expected to continue its strong performance following the previous day. This is due to a favorable environment created by the decline in the 10-year U.S. Treasury yield, which represents market interest rates, after the December Federal Open Market Committee (FOMC) meeting, and the further drop in the won-dollar exchange rate.

On the previous day (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 37,248.35, up 0.43% from the previous session. It marked the highest level for two consecutive days. The S&P 500, which focuses on large-cap stocks, rose 0.26% to 4,719.55, and the tech-heavy Nasdaq index closed up 0.2% at 14,761.56.

The Dow index set a new all-time high following the previous day, while the S&P 500 and Nasdaq indices reached 52-week highs. The Philadelphia Semiconductor Index also surged more than 2%, hitting an all-time high due to strength in equipment and AI-related stocks outside of big tech, raising expectations for a year-end rally in the U.S. stock market.

Economic indicators also support expectations of a soft landing for the economy and a slowdown in inflation. Employment is slowing moderately, and consumption remains robust. U.S. initial jobless claims were slightly down to 202,000 (expected 220,000, previous week 220,000). Continued claims for at least two consecutive weeks rose steadily to 1,876,000 (expected 1,879,000, previous week 1,856,000).

Additionally, U.S. retail sales in November rose 0.3% month-over-month (expected -0.1%, previous month -0.2%), significantly exceeding expectations. Core retail sales, excluding automobiles and energy, also increased by 0.6% month-over-month (expected 0.2%, previous month 0.0%), indicating a strong Black Friday effect.

Meanwhile, the 10-year U.S. Treasury yield fell below 4% for the first time in about four months, closing at 3.975% the previous day. The exchange rate is also favorable for the domestic stock market. The won-dollar exchange rate closed at 1,295.4 won, down 24.5 won.

Han Ji-young, a researcher at Kiwoom Securities, analyzed, "The sharp drop in the won-dollar exchange rate has created a positive environment for foreign inflows, sustaining risk appetite until the end of the year," and added, "We expect large-cap stocks to outperform." She further noted, "As the interest rate cut cycle returns, not only biotech, semiconductors, and cryptocurrencies but also solar power, energy, and banking sectors have outperformed market returns in the U.S. stock market. It is necessary to pay attention to whether buying momentum will also flow into cyclical stocks in the domestic market."