[Good Morning Market] Korean Stocks Expected to Open Higher on U.S. Tech Rally

Box-Range Trend Expected to Continue
Ahead of U.S. Employment Data Release

On September 4, the Korean stock market is expected to open higher, reflecting the rebound in technology stocks seen in the New York stock market. However, with investors awaiting the release of the U.S. August employment report this week, a wait-and-see stance is likely to persist, making it probable that the index will fluctuate within a limited range.

On September 3 (local time), the Dow Jones Industrial Average in the New York stock market closed at 45,271.23, down 24.58 points (0.05%) from the previous trading day. In contrast, the S&P 500 Index, which focuses on large-cap stocks, rose by 32.72 points (0.51%) to close at 6,448.26, while the technology-heavy Nasdaq Index jumped 218.10 points (1.03%) to 21,497.73. The Russell 2000 Index, which is centered on small- and mid-cap stocks, fell by 0.10%.

Shares of Alphabet, Google's parent company, surged more than 9% after a U.S. court ruled that Google would not be required to sell its Chrome browser. Apple also rose by more than 3% after the court allowed Google to continue paying third parties, such as Apple, to set its services as the default browser. Other major big tech companies, including Meta, Tesla, and Amazon, also posted strong gains, leading the technology stock rally.

The rebound in the S&P 500 and Nasdaq indices was also positively influenced by signs of a slowdown in the U.S. job market. According to the U.S. Department of Labor, the number of job openings in July, as measured by the Job Openings and Labor Turnover Survey (JOLTs), was 7,181,000, down by 176,000 from the previous month's 7,357,000 and below the market forecast of 7,380,000. With job openings falling to their lowest level in 10 months, the market reflected concerns over weaker hiring and increased expectations for a rate cut in September.

The U.S. Federal Reserve's assessment of the economy was also interpreted as a sign of economic slowdown. In the Beige Book released on the same day, the Fed noted, "There was little change in economic activity in most districts compared to the previous report," and pointed out that "consumer spending has stagnated or declined, and for many households, wage growth has not kept pace with rising prices." While inflation was moderate, the Fed noted that some regions experienced sharp increases in costs.

According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market has priced in a more than 95% probability that the Fed will cut its current benchmark interest rate of 4.25-4.5% by 0.25 percentage points at the upcoming Federal Open Market Committee (FOMC) meeting on September 17.

The domestic stock market is expected to show strength in early trading, buoyed by positive sentiment from the U.S. However, as investors' attention is focused on the U.S. August employment report to be released on September 5, a wait-and-see approach is likely to continue, with investors gauging stock price levels rather than engaging in aggressive buying.

Lee Sunghoon, a researcher at Kiwoom Securities, predicted, "The market will open higher, reflecting the surge in Alphabet shares and the rebound in technology stocks amid stabilizing U.S. Treasury yields, but the current box-range trend is expected to persist." He added, "Since the recent Korea-U.S. summit, nuclear cooperation between the two countries is becoming more tangible, and the positive outlook for small modular reactors (SMRs) will also act as a favorable factor for domestic nuclear power stocks."