[Good Morning Market] Record-High U.S. Stocks Expected to Boost Korean Market

S&P 500 and Nasdaq Close at Record Highs
Optimism Grows Over Big Tech Earnings, Led by the M7
Foreign Investors Bet on Korean Stocks... Hopes for Corporate Governance Improvements

With optimism over the earnings of major U.S. companies pushing the S&P 500 and Nasdaq indexes to record highs, a positive momentum is expected to carry over into the Korean stock market on July 22. Analysts note that as foreign investors continue to buy in anticipation of improvements in corporate governance, there are still favorable factors remaining in the market.

On July 21 (local time) in the New York stock market, the S&P 500 index closed at 6,305.60, up 0.14% from the previous day. The tech-heavy Nasdaq index rose 0.38% to close at 20,974.18. Both indexes set new all-time highs. The Dow Jones Industrial Average, however, slipped 0.04% to 44,323.07.

This is interpreted as the result of growing optimism in the market regarding second-quarter earnings, especially among big tech companies scheduled to announce results this week. In addition, expectations have risen that the economic impact of tariffs will be less severe than previously feared. Market research firm FactSet projected that more than 85% of the 62 S&P 500 companies that have reported second-quarter results so far will exceed market expectations. Last week, major U.S. banks already posted stronger-than-expected results, and Verizon, the largest telecommunications company, also reported better-than-expected earnings, with its stock price rising by 4.04%. In particular, the combined second-quarter net profits of the seven major U.S. big tech companies?Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla?are expected to increase by 14% compared to the same period last year.

The market is also closely watching Federal Reserve Chair Jerome Powell’s public remarks scheduled for July 22. With the Federal Open Market Committee (FOMC) regular meeting set for July 29?30, there is keen interest in what Powell will say about inflation, employment, and the path of interest rates in his final public comments before the meeting. Despite persistent calls from President Trump for interest rate cuts, Powell has maintained a stance of holding rates steady, citing concerns over tariff-induced inflation.

This upward trend in the U.S. stock market is expected to have an impact on the Korean market as well. The MSCI Korea ETF, which tends to move in line with the Korean stock market, closed up 2.04%. The MSCI Emerging Markets ETF also rose 0.65%, reaching a new 52-week high. The Philadelphia Semiconductor Index climbed 0.12%, also setting a new 52-week high.

Han Ji-young, a researcher at Kiwoom Securities, said, "Foreign investors, who are raising the lower bound of the domestic stock market in terms of supply and demand, have made net purchases of about 2.9 trillion won in KOSPI in July. There appears to be demand for preemptive bets, as they are not reacting negatively to external variables and are optimistic about having passed the peak of tariff risks and about the bottoming out of second-quarter earnings for leading export companies." She added, "Policy momentum remains, including the separate taxation of dividend income and the mandatory cancellation of treasury shares. As foreigners are also betting on improvements in domestic corporate governance, domestic investors should pay attention to these factors as well."