[Good Morning Stock Market] Entering Impeachment Crisis... Domestic Stock Market Expected to See Increased Volatility

US-Originated Tailwind Spurs Oversold Stocks to Attempt a Rebound

As the impeachment political situation intensifies and political uncertainty increases, volatility in the KOSPI is also expected to expand. However, due to factors such as positive momentum from the U.S., a rebound is anticipated mainly among oversold stocks.

The three major indices of the U.S. New York stock market all hit record highs on the 4th (local time). The Dow Jones Industrial Average (Dow) surpassed the 45,000 mark for the first time. On that day, the Dow, which is centered on blue-chip stocks, closed at 45,014.04, up 308.51 points (0.69%) from the previous trading day, crossing the 45,000 threshold. The large-cap S&P 500 index rose 36.61 points (0.61%) to 6,086.49, and the tech-heavy Nasdaq index closed at 19,635.12, up 254.21 points (1.3%), setting new all-time highs once again.

Han Ji-young, a researcher at Kiwoom Securities, said, "Concerns over the Federal Reserve's (Fed) decision to hold interest rates steady in December, which had been a ceiling for major global stock markets for some time, appear to be easing over time." She analyzed, "The day before, Fed Chair Jerome Powell expressed an optimistic economic outlook, stating that the U.S. economy is performing better than expected in September, which may have injected uncertainty among market participants regarding a rate cut in December."

The domestic stock market started lower the previous day despite the neutral to positive trend in the U.S. stock market, due to increased political uncertainty in Korea following the declaration and lifting of martial law, which heightened instability across the financial markets. However, announcements of market stabilization measures by authorities during the trading session limited further declines. On the 4th, the KOSPI closed at 2,464.00, down 36.10 points (1.44%) from the previous day. Foreign investors sold stocks worth 407.8 billion KRW, while individuals and institutions net bought 338 billion KRW and 19 billion KRW, respectively. The KOSDAQ index closed at 677.15, down 13.65 points (1.98%) from the previous session.

Despite the presence of political uncertainty domestically, the domestic stock market is expected to rebound mainly among oversold stocks due to the positive momentum from the strong U.S. New York stock market. Researcher Han Ji-young said, "Although domestic political uncertainty will persist today, a favorable macroeconomic environment is being created thanks to the strong momentum across U.S. artificial intelligence (AI) stocks, the easing of the sharp rise in the won-dollar exchange rate, and the decline in U.S. interest rates driven by expectations of Fed rate cuts, leading to a rebound mainly among oversold stocks." She added, "For the time being, the Korean stock market will be influenced not only by U.S. issues but also by domestic political issues."

Kim Ji-won, a researcher at KB Securities, said, "Political uncertainty is inevitable domestically for the time being. However, given the low valuation levels and stabilization measures, absorption of selling pressure at the current level is expected. It is necessary to monitor the exchange rate and supply-demand conditions and respond accordingly."