[Good Morning Stock Market] US Stock Market Rally... Foreign Investor Flows in Domestic Market 'In Focus'

As the three major U.S. stock indices showed simultaneous gains, the domestic stock market is expected to focus on foreign investor flows.

[Image source=AFP Yonhap News]

On the 23rd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 462.30 points (1.14%) from the previous trading day to close at 41,175.08. The large-cap focused S&P 500 index increased by 63.97 points (1.15%) to 5,634.61, and the tech-heavy Nasdaq index closed up 258.44 points (1.47%) at 17,877.79.

Last week, the U.S. stock market closed higher following remarks by Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), at the Jackson Hole meeting. Powell stated, "We have increased confidence that inflation is on a sustainable path to 2%," and added, "The time has come to adjust policy." He also mentioned that he does not welcome further cooling of the labor market. Accordingly, Seokhwan Kim, a researcher at Mirae Asset Securities, explained, "Powell's mention of 'policy adjustment' can be interpreted as a signal to change the tightening monetary policy that has been ongoing since March 2022 at the next Federal Open Market Committee (FOMC) meeting," and "He strongly hinted at a rate cut in September."

By sector, all sectors of the S&P 500 rose, with real estate (2.0%), IT (1.7%), and consumer discretionary (1.7%) showing strong performance. Additionally, healthcare, financials, and industrials reached record highs.

Among individual stocks, Apple rose 1.0% following some media reports that it will unveil the iPhone 16 on the 10th of next month. In contrast, Intuit fell 6.8% after its earnings outlook for the current quarter and fiscal Q4 both fell short of expectations.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) rose 3.2%, and the Emerging Markets Index ETF increased by 1.7%. Eurex KOSPI 200 futures rose 0.4%.

The domestic stock market is expected to focus on foreign investor flows. Researcher Kim said, "Powell's remarks at the Jackson Hole meeting will strengthen foreign investors' risk-on sentiment in the domestic market," adding, "The won-dollar exchange rate could fall to the low 1320 won range."

Researcher Daejun Kim of Korea Investment & Securities noted, "There will be a distinction between sectors benefiting from and harmed by falling interest rates," and pointed out, "Looking at the correlation between interest rate changes and sector indices over the past 10 years, defensive stocks such as IT, defense, food and beverage, and utilities showed favorable trends when market interest rates declined." He added, "Regarding market supply and demand, attention should be paid to IT and defense sectors," and analyzed, "Foreign investors, who influenced market flows last week, were net sellers in these sectors. However, there is now a possibility of improvement in the global liquidity environment following the Jackson Hole meeting."

On the same day, the one-month non-deliverable forward (NDF) won-dollar exchange rate in New York was 1,322 won, and reflecting this, the won-dollar exchange rate is expected to start down by 7 won.