[Good Morning Stock Market] Steady US Economy, Market Closes Lower... "KOSPI Expected to Start Down"

The Korean stock market is expected to start lower on the 28th. It is anticipated to be influenced by the decline of the three major indices in the U.S. New York stock market, which engaged in profit-taking. In particular, as the U.S. economy continues to show solid growth and last month's inflation slowdown appears to have stalled, there are also expectations that the Federal Reserve (Fed) may slow down the pace of interest rate cuts.

On the 27th (local time) in the New York stock market, the Dow Jones Industrial Average closed at 44,722.06, down 138.25 points (0.31%) from the previous trading day. The S&P 500 index fell 22.89 points (0.38%) to 5,998.74, and the Nasdaq index dropped 115.1 points (0.6%) to close at 19,060.48.

On the same day, the U.S. Department of Commerce announced that the preliminary growth rate for the third quarter (July to September) was 2.8%. Consumer spending, a key component of GDP growth, was revised downward from the advance estimate of 3.7% to a preliminary figure of 3.5%. Most other figures remained largely unchanged.

The increase rate of the Personal Consumption Expenditures (PCE) price index was the same at 1.5% for both the advance and preliminary estimates. The PCE price index excluding food and energy rose by 2.1%. The PCE price index is the inflation indicator preferred by the Fed.

The labor market also remained stable. New unemployment claims for the week of November 10-16 totaled 213,000, down 2,000 from the revised figure of the previous week. This is the lowest level in seven months since April, and it also fell short of experts' expectations of 215,000 by 2,000 claims.

With economic indicators showing strength, the market views a high possibility that the Fed will implement a 'small cut' (0.25 percentage point interest rate reduction) next month.

Seonghun Lee, a researcher at Kiwoom Securities, said, "The Korean stock market will start on a downward trend reflecting the decline of large technology and semiconductor stocks in the U.S. market (Philadelphia Semiconductor Index -1.51%). However, the downside will be supported by institutional investors' bargain hunting."

Similar to the U.S. stock market, sectoral differentiation continues in the domestic market. In particular, the tariff policy uncertainty expected following Trump's election in the U.S. presidential race is judged to be a factor that will increase volatility in domestic export stocks for the time being. Lee said, "In addition, semiconductor stocks have yet to show clear upward momentum due to concerns over the recent repeal of the CHIPS Act and continued downward revisions of earnings consensus. On the other hand, sectors less sensitive to U.S. trade policies such as finance, telecommunications, and entertainment are showing solid stock price trends."

Considering that many major companies still implement year-end dividends despite recent changes in dividend record dates, the inflow of funds for dividend receipt purposes is expected to continue as the year-end approaches. Lee said, "Amid ongoing policy noise from Trump, demand for high-dividend stocks as a defensive measure to control volatility is also expected to continue."