[Good Morning Stock Market] KOSPI in Wait-and-See Mode Amid Domestic and International Issues Including US Trump Inauguration

On the 20th, the KOSPI is expected to show a cautious stance amid domestic and international issues.

On the 17th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 43,487.83, up 334.70 points (0.78%) from the previous session. The S&P 500 rose 59.32 points (1.00%) to 5,996.66, and the Nasdaq Composite surged 291.91 points (1.51%) to close at 19,630.20.

Although there were no major economic indicators or events that day, the New York stock market was supported by expectations ahead of the inauguration of President-elect Donald Trump. Additionally, easing inflation concerns increased expectations that the Federal Reserve (Fed) would maintain its stance on interest rate cuts.

Among individual stocks, Nvidia and Tesla stood out with gains in the 3% range. Microsoft and Alphabet also recorded increases in the 1% range. Apple, which had fallen more than 4% the previous day due to weak sales in China, rebounded by only 0.75%. Goldman Sachs and Morgan Stanley both saw their stock prices rise more than 11% this week.

Last week, despite the US 10-year Treasury yield level in the high 4.7% range acting as a constraint on the market early in the week, the domestic stock market closed higher as risk appetite recovered amid falling market interest rates following the Consumer Price Index (CPI) release.

This week, the domestic stock market is expected to be influenced by ▲ Trump’s inauguration ▲ major countries’ manufacturing Purchasing Managers’ Index (PMI) for the US and Eurozone ▲ South Korea’s January exports ▲ Bank of Japan (BOJ) monetary policy meeting ▲ earnings reports from major domestic and international companies such as Netflix, SK Hynix, and Hyundai Motor ▲ and cautious sentiment ahead of the upcoming long domestic holiday.

Trump is reported to announce about 100 executive orders including strategic stockpiling of Bitcoin, banning TikTok usage, closing the southern border, and deporting illegal immigrants. While uncertainty may increase with this inauguration, it is important to note that since the November election last year, the market has developed resilience and learning effects regarding Trump risks.

Han Ji-young, a researcher at Kiwoom Securities, said, “Unless radical tariff policies, which are sensitive to the stock market, are announced at the inauguration, even if the Trump trade resumes during the week, its impact and sustainability will not be as significant as before.” She added, “Although detailed contents have not been disclosed, the fact that discussions took place between Trump and Xi Jinping regarding trade, fentanyl, and TikTok could also reduce the intensity of uncertainty surrounding Trump’s policies.”

Internally in the stock market, the ongoing Q4 earnings season is a key point to watch. In the US, earnings reports from major tech and biotech companies such as Netflix and Johnson & Johnson are scheduled, but the main focus is expected to be on next week’s earnings of the Magnificent 7 (M7) companies including Tesla, Apple, and Amazon. Therefore, the market impact of US corporate earnings this week is expected to be limited.

On the other hand, in South Korea, earnings reports from major companies such as SK Hynix, Hyundai Motor, and Kia are attracting attention. Considering that the KOSPI showed a resilient trend despite earnings shocks from Samsung Electronics and LG Electronics, it will be crucial to see whether the market reacts similarly to expectations in this earnings season.

However, one researcher forecasted, “From the 27th next week, the domestic stock market will enter a long holiday closure due to the Lunar New Year, while major events such as M7 earnings announcements and the Federal Open Market Committee (FOMC) meeting are scheduled in the US. Since these events are likely to affect the global stock market until February, from the latter part of this week, there may be a supply-demand gap due to caution and a wait-and-see stance ahead of the holiday.”