[Good Morning Market] "US-China Negotiation Expectations... Korea Anticipates Sectoral Divergence"

As expectations for the second round of high-level trade talks between the United States and China continue to grow, the Korean stock market on June 11 is expected to see foreigners moderating their net buying pace and a differentiated trend by industry sector.

On June 10 (local time), all three major U.S. stock indices closed higher. The blue-chip Dow Jones Industrial Average rose by 105.11 points (0.25%) to finish at 42,866.87. The large-cap S&P 500 climbed 32.93 points (0.55%) to close at 6,038.81, while the tech-heavy Nasdaq gained 123.75 points (0.63%) to end at 19,714.99.

News of the second consecutive day of U.S.-China trade talks in London heightened market expectations. In the first round of talks, both countries agreed to lower tariffs on each other's goods by 115 percentage points. In this second round, the focus is on export control issues. If the talks conclude successfully, there are expectations that U.S. export restrictions will be eased and that China will release a large volume of rare earth elements.

On the 10th (local time), an auctioneer (specialist) is working at the New York Stock Exchange in the United States. Photo by AP News

By stock, Taiwan's semiconductor company TSMC rose 2.64% after announcing that its sales in the previous month had surged by 40%. Tesla soared 5.67% as tensions between CEO Elon Musk and U.S. President Donald Trump appeared to ease. Previously, CEO Musk had expressed support for President Trump's hardline response to an immigrant protest in Los Angeles (LA) and deleted a post criticizing President Trump from his social networking service X (formerly Twitter). In contrast, food company JM Smucker plunged 15.59% after its profit outlook for the upcoming fiscal year fell short of market expectations.

Regarding the Korean stock market, Han Ji-young, a researcher at Kiwoom Securities, predicted, "There will be a differentiated trend by industry sector amid stagnation at the upper end of the index." She added, "From a supply and demand perspective, foreigners will influence the index's direction. There is a possibility of short-term price pressure as foreigners rapidly increase their weighting in KOSPI. In fact, during the period since last month when foreigners made net purchases of 4.9 trillion won in KOSPI, the KOSPI index has already surged by over 12%."

Kim Ji-won, a researcher at KB Securities, said, "Expectations for U.S.-China negotiations and TSMC's strong performance could extend the strength of semiconductor-related stocks. The U.S. Consumer Price Index (CPI) result to be released tonight will be a short-term variable." She also noted, "The domestic stock market's price-to-book ratio (PBR) is approaching 1, and individual stocks are digesting supply. Although foreign net buying continues, the pace is expected to moderate."