[Good Morning Stock Market] Santa Rally Concerns... Will KOSPI Enter a Breather?

[Image source=Yonhap News]

On the 2nd, the KOSPI index is expected to show a hesitant pattern due to concerns over the Santa rally.

On the 29th (local time), the Dow Jones Industrial Average closed at 37,689.54, down 20.56 points (0.05%) from the previous session. The Standard & Poor's (S&P) 500 index fell 13.52 points (0.28%) to 4,769.83, and the Nasdaq index dropped 83.78 points (0.56%) to 15,011.35.

The New York stock market closed lower, led by weakness in semiconductors and large technology stocks, just before reaching all-time highs. On the other hand, defensive sectors such as healthcare and consumer staples showed relative strength, helping to cushion the decline.

Both the New York and domestic stock markets have been on an upward trend for nine consecutive weeks since November last year. The KOSPI rose over 2% last week, supported by strong U.S. economic indicators and strength in semiconductor-related stocks. As a result, the market expects that the Santa rally, having lasted for a long time, will enter an overheated phase this week.

The domestic stock market is expected to be influenced by short-term overheating concerns, the December Federal Open Market Committee (FOMC) minutes, December Job Openings and Labor Turnover Survey (JOLTs), January nonfarm payroll data, interest rate changes, major countries’ manufacturing indicators, and issues related to domestic real estate project financing (PF) defaults. Accordingly, the KOSPI index is expected to move within the 2,580 to 2,690 range this week.

Joon-ki Cho, a researcher at SK Securities, analyzed, “Due to overheating in technical indicators, it cannot be said that the market will definitely fall, but probabilistically it is a burdensome zone. Depending on the results of the indicators released this week, it could provide an excuse for a correction.”

Ji-young Han, a researcher at Kiwoom Securities, analyzed, “Since short-term speed burdens are accumulating, whether the market will rise for the 10th consecutive week after nine consecutive weeks is something to consider.”

He forecasted that although the main driving force behind the year-end market rise was the December FOMC results, much of the momentum has been exhausted in terms of stock prices, so the key will be whether additional momentum can be gained through the scheduled FOMC minutes this week.

The researcher explained, “Although the December FOMC statement itself contained less dovish expressions compared to November, Chairman Powell’s press conference remarks led the market to interpret the December FOMC as a surprise positive factor. In this regard, the key point to watch in the December FOMC minutes will be the extent to which internal Federal Reserve discussions were held regarding the timing and magnitude of rate cuts and the direction of inflation.”