[Good Morning Market] "US Shutdown Concerns and Holiday Cash Demand Limit Upside Potential"

While all three major U.S. stock indexes closed higher, the Korean stock market on September 30 is expected to have limited upside potential due to concerns over a potential U.S. federal government shutdown and increased demand for cash ahead of the Chuseok holiday.

On September 29 (local time), at the New York Stock Exchange, the blue-chip Dow Jones Industrial Average closed at 46,316.07, up 68.78 points (0.15%) from the previous trading day. The S&P 500, which focuses on large-cap stocks, rose by 17.51 points (0.26%) to 6,661.21, while the tech-heavy Nasdaq climbed 107.085 points (0.48%) to close at 22,591.154.

After losing momentum last week due to skepticism over the artificial intelligence (AI) rally, the market rebounded on the first trading day of this week, led by gains in technology stocks. Nvidia rose 2.07%, Micron and AMD gained 4.22% and 1.18%, respectively. Microsoft was up 0.61%, and Tesla increased by 0.64%. Shares of Electronic Arts, a U.S. video game company, surged 4.5% on news that it would be acquired for $55 billion by an investment consortium led by the Saudi Arabian sovereign wealth fund, resulting in its transition to a private company.

A trader is working at the New York Stock Exchange in the United States. Photo by UPI Yonhap News

However, the possibility of a federal government shutdown limited gains during the session. As the U.S. Congress failed to reach an agreement on a stopgap budget following the expiration of the 2025 fiscal year budget on this day, there is a risk that federal government agencies will be forced to halt operations starting October 1. U.S. President Donald Trump is scheduled to meet with the opposition Democratic Party leadership later in the afternoon.

Regarding the Korean stock market on this day, Han Jiyeong, a researcher at Kiwoom Securities, stated, "Despite the strength in U.S. AI and semiconductor stocks, the upper range of stock prices is likely to be limited due to caution over a federal government shutdown and some demand for cash ahead of the extended holiday." He added, "Recent news about Korea-U.S. currency negotiations, which is related to the recent surge in exchange rates that injected volatility into the domestic market, will also affect foreign investor flows, especially in large-cap stocks."

He explained, "Recently, major stock markets in Korea, the United States, and other countries are facing short-term resistance at the upper end following this month's rally, due to concerns about the pace and fatigue." He continued, "Worries over a federal government shutdown are acting as another source of noise for the market." Nevertheless, he advised, "Looking at past cases, the impact of a shutdown and the resulting delay in key economic indicators on overall market direction has been limited. Considering this, it would be appropriate to avoid overly conservative responses, such as increasing cash holdings, during the period of stock price volatility that may follow an actual shutdown."