[Good Morning Stock Market] KOSPI Expected to Start Higher... Individual Stocks to Lead the Market

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On the 10th, the KOSPI index is expected to start higher, supported by the recovery in losses in the U.S. stock market.

At the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 37,525.16, down 157.85 points (0.42%) from the previous session. The S&P 500 fell 7.04 points (0.15%) to 4,756.50, while the Nasdaq closed up 13.94 points (0.09%) at 14,857.71.

On that day, the U.S. stock market showed limited movement ahead of the December Consumer Price Index (CPI) release and with the U.S. 10-year Treasury yield surpassing 4%, but the Nasdaq ended higher, buoyed by Nvidia reaching an all-time high.

Economists expect the CPI to have risen 3.2% year-over-year, up from 3.1% the previous month. However, the core CPI is expected to have increased 3.8% year-over-year, slowing from 4.0% the previous month. If inflation does not slow faster than expected, there is analysis suggesting that expectations for a Federal Reserve (Fed) rate cut in March will diminish and the Fed’s cautious stance may be prolonged.

Currently, the market views six Fed rate cuts as excessive. As a result, reversals such as rate rebounds and dollar rebounds are frequently occurring. However, declining inflation expectations and leading themes such as artificial intelligence (AI) stocks appear to be supporting the downside of the index.

Yesterday, the domestic stock market closed mixed as Samsung Electronics’ weak earnings caused large-cap stocks to give back intraday gains despite the surge in U.S. AI stocks like Nvidia and the decline in expected inflation from the New York Federal Reserve.

However, today the KOSPI is expected to start higher due to technical buying following five consecutive trading days of declines and the intraday recovery in the U.S. stock market. During the session, the market is expected to be influenced by changes in individual sectors and themes, such as news flow related to CES 2024, the JP Morgan Healthcare Conference, and Bitcoin ETF approvals, leading to a stock-specific market.

Han Ji-young, a researcher at Kiwoom Securities, said, “Most major countries’ stock markets are currently experiencing an atmosphere where earnings growth expectations are excessive. If the Q4 earnings season can justify such significant earnings growth, the stock market should be able to break through the upper range of the index without much difficulty.”

She added, “However, with earnings shocks from major IT large-cap stocks like Samsung Electronics and LG Energy Solution yesterday, the overall market operating profit is expected to decline compared to last year. The downward revision of earnings forecasts is expected to proceed gradually over the next quarter (January to March), reflecting changes in the macro environment, rather than rapidly breaking through the lower bound of the index.”

Meanwhile, the Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 2.26%. The MSCI Emerging Markets ETF declined 1.42%. Eurex night futures dropped 0.26%. The New York Non-Deliverable Forward (NDF) USD/KRW exchange rate was 1,318.35 won, which suggests the USD/KRW rate is expected to open about 3 won higher.