[Good Morning Stock Market] Amid Worsening US Consumer Sentiment, Korea Expected to Maintain Wait-and-See Stance... Monitoring Foreign Investors' Shift to Net Selling

"Technical Rebound Expected for Defense and Biotech Stocks"

On the 26th, the domestic stock market is expected to maintain a cautious stance, reflecting concerns about a U.S. economic recession as indicated by consumer sentiment indicators.

Earlier, the New York stock market closed slightly higher across the board on the 25th (local time). The market started strong on President Donald Trump's remarks about mutual tariff exemptions, but the upward momentum slowed as consumer sentiment indicators sharply deteriorated amid concerns of an economic downturn due to tariff policies. The Dow Jones Industrial Average, focused on blue-chip stocks, rose 4.18 points (0.01%) to 42,587.5; the S&P 500, centered on large-cap stocks, gained 9.08 points (0.16%) to 5,767.65; and the Nasdaq, dominated by tech stocks, jumped 83.26 points (0.46%) to close at 18,271.86.

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Seokhwan Kim, a researcher at Mirae Asset Securities, commented, "The U.S. March Consumer Confidence Index was announced at 92.9, below market expectations (94), marking the lowest level since the pandemic, raising concerns about economic slowdown. However, President Trump's remarks on tariff policy flexibility provided some relief to investors, positively impacting the stock market."

The domestic stock market is expected to start with supply and demand centered on stocks that sharply fell the previous day, such as defense stocks. Ji-young Han and Seong-hoon Lee, researchers at Kiwoom Securities, forecast, "With the easing of tariff concerns from Trump and technical buying in defense and biotech stocks that sharply dropped the previous day, the market is expected to start higher. However, noise from the resumption of short selling and the impact of Alibaba chairman's remarks on an AI data center bubble are likely to temporarily increase supply-demand volatility, especially in semiconductors, resulting in limited price movement during the trading session."

Another point to watch is that foreign investors, who recorded a record net purchase of about 2.8 trillion KRW in the KOSPI last week, have turned to net selling (-70 billion KRW) this week. Researchers Han and Lee noted, "The retreat in foreign investors' continuous net buying is suppressing confidence in stock price increases. Until foreign investors switch back to a trend of net buying, it is worth paying short-term attention to sectors where foreign investors have shown a net buying trend, such as capital goods (7 consecutive weeks of net buying, 920 billion KRW), construction (4 consecutive weeks, 56 billion KRW), education (3 consecutive weeks, 33 billion KRW), automobiles (2 consecutive weeks, 500 billion KRW), and IT hardware (2 consecutive weeks, 25 billion KRW)."

The market is now closely watching this week's economic indicators, which will serve as gauges for the U.S. economy. The most important indicator is the February Core Personal Consumption Expenditures (PCE) Price Index, to be released by the U.S. Department of Commerce on the 28th. On the 27th, a day earlier, weekly initial jobless claims reflecting labor market conditions and the finalized GDP growth rate for Q4 of last year will be announced. On April 4th, the U.S. Department of Labor is expected to provide more accurate information on the U.S. labor market through the March employment report.