[Good Morning Market] Strong U.S. Corporate Earnings... KOSPI Expected to Open Higher

On July 18, the KOSPI is expected to open higher, influenced by strong corporate earnings in the United States.

The previous day, at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 44,484.49, up 229.71 points (0.52%) from the previous session. The S&P 500 Index rose 33.66 points (0.54%) to 6,297.36, and the Nasdaq Composite climbed 153.78 points (0.73%) to finish at 20,884.27.

The New York stock market gained as robust retail sales figures, which significantly exceeded market expectations, highlighted a solid recovery in the consumer market. U.S. retail sales for June increased by 0.6% month-on-month, far surpassing both the market forecast (0.1%) and the previous month’s figure (-0.9%). Core retail sales, which exclude automobiles, gasoline, and food services and are used in GDP calculations, also rose by 0.5% from the previous month, beating the market expectation of 0.3%.

Some analysts attribute the strong retail sales to a base effect from the sharp decline in May (-0.9%) and note that, as a nominal indicator, the figures partially reflect price increases. However, the market largely focused on the resilient recovery of the consumer market despite tariff concerns, which in turn fueled risk appetite among investors.

Additionally, as earnings season is now in full swing, the New York stock market has entered a phase where it is more sensitive to individual corporate earnings than to macroeconomic factors. According to FactSet, among the 50 S&P 500 companies that reported earnings this week, 88% posted results that exceeded market expectations, supporting the market’s upward trend. On this day, strong second-quarter earnings led to sharp gains in shares of United Airlines (up 3.1%) and PepsiCo (up 7.4%).

However, Netflix, which announced its earnings after the market closed, saw its shares fall by around 1% in after-hours trading. This was despite an earnings surprise and an upward revision of its annual revenue guidance (from $43.5?44.5 billion to $44.8?45.2 billion), as the company lowered its operating margin outlook for the second half of the year.

The previous day, the Korean stock market initially declined due to concerns over U.S. Treasury yield levels, profit-taking, and rumors regarding President Donald Trump’s possible dismissal of Federal Reserve Chairman Jerome Powell. However, buying focused on large-cap stocks that had previously been neglected, such as Samsung Electronics, led both indices to close higher.

Today, the Korean stock market is expected to open higher, supported by improved risk appetite amid strong U.S. retail sales data and corporate earnings. However, resistance at the yearly high level and the won-dollar exchange rate entering the 1,390 won range are likely to keep the KOSPI trading in a limited range around the 3,200 level.

Lee Sunghoon, a researcher at Kiwoom Securities, analyzed, "A notable feature of the recent domestic stock market is the pronounced rotation from previously leading stocks to those that had been neglected. In fact, the top-performing sectors this month?steel (15.3%) and healthcare (13.3%)?had lagged last month, while utilities (-5.1%), machinery (-3.4%), and software (-3.2%), which had seen large gains last month, have underperformed."

He added, "In terms of individual stocks, Samsung Electronics has recently shown relative strength compared to SK Hynix. Therefore, attention should be paid to the continued inflow of funds into previously neglected stocks for the time being."