[Good Morning Stock Market] Rising Expectations for US Interest Rate Cuts... KOSPI Expected to Start Higher

On the 7th, the KOSPI is expected to start higher as expectations for a US interest rate cut rise.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 38,852.27, up 176.59 points (0.46%) from the previous trading day. The S&P 500 index, centered on large-cap stocks, rose 52.95 points (1.03%) to 5,180.74, and the tech-heavy Nasdaq index finished at 16,349.25, up 192.92 points (1.19%).

The New York stock market closed higher as expectations for an interest rate cut increased following the deterioration of the US employment data for April. According to the April employment report released by the US Department of Labor on the 3rd, nonfarm payrolls increased by 175,000 compared to the previous month, significantly below the expert forecast of 240,000 compiled by Dow Jones. The unemployment rate rose 0.1 percentage points to 3.9%, and the weekly wage growth rate slowed to 0.2% compared to the previous month.

By sector, the semiconductor industry showed strength. Positive trend forecasts for the semiconductor sector in the market led the Philadelphia Semiconductor Index to rise by about 2.2%. Nvidia, Super Micro Computer, AMD, and others also closed with gains of 3-6%.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) rose 0.9%, and the MSCI Emerging Markets Index ETF increased by 0.1%. Eurex KOSPI 200 futures rose 1.1%. Considering this, the KOSPI is expected to start the day with an increase of around 1%.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, “The easing pressure on US Treasury yields and the dollar index will positively affect foreign investors' sentiment.” He added, “Foreign investors have been net buyers for five consecutive trading days until last Friday, and this trend is likely to continue in the early part of this week, so attention should be paid to the flow of large-cap stocks such as semiconductors and automobiles.”

Han Ji-young, a researcher at Kiwoom Securities, said, “Considering that the main sectors such as semiconductors and automobiles showed good first-quarter earnings in the domestic stock market, the KOSPI is judged to have secured downside rigidity after the sharp decline in April.” She added, “Market participants will now focus on finding factors that can resume the rising trend that was interrupted by the April triple highs (high oil prices, high interest rates, high exchange rates).”

She also said, “Both the US and Korean stock markets have entered the latter half of the earnings season, where earnings events of leading sectors such as big tech, semiconductors, and automobiles, which influence the overall direction of the index, have ended.” She forecasted, “Typically, the latter half of the earnings season tends to be a stock-specific market, so this week, depending on individual earnings of companies such as Kakao, L&F, Wemade, NCSoft, and Korea Zinc, a differentiated market between sectors and stocks will develop.”

Meanwhile, the one-month non-deliverable forward (NDF) won-dollar exchange rate in New York closed at 1,353 won the previous day, and considering this, the won-dollar exchange rate is expected to start down 11 won on the day.