[Good Morning Market] All Three Major US Indices Hit Record Highs... Sector Rotation Expected in Korean Market

Optimism Over Easing US-China Tensions; AI Big Tech Stocks Also Rally
S&P 500 Surpasses 6,800... Nasdaq Jumps 1.86%
Positive Outlook for Korean Market, but a Pause Is Possible

All major indices on the US stock market reached all-time highs. This appears to reflect optimism about easing tensions following the summit between the United States and China. The domestic stock market, which has also been on an upward trajectory, is expected to open higher as well. However, as investors realize short-term profits after recent sharp gains, a rotation market is likely to emerge.

On October 27 (local time) at the New York Stock Exchange, the S&P 500 index rose 1.23% from the previous trading day to close at 6,875.16, surpassing the 6,800 mark for the first time ever. The Dow Jones Industrial Average also ended up 0.71% at 47,544.59. The tech-heavy Nasdaq index surged 1.86% to finish at 23,637.46. All three major indices set new record highs.

Shares of major big tech companies such as Nvidia (up 2.81%), Apple (up 2.28%), Meta (up 1.69%), and Microsoft (up 1.51%) all rose together. Tesla shares climbed 4.31%. Qualcomm soared 11.1%, driven by the unveiling of its next-generation artificial intelligence (AI) chip. Other theme stocks, including those related to nuclear power and quantum technologies, also showed strong gains. However, rare earth-related stocks and automakers such as General Motors declined, as the easing of US-China tensions acted as a negative factor for them.

International oil prices edged down slightly, despite expectations of a US-China agreement, as recent gains prompted a pullback. OPEC Plus (OPEC+, a coalition of 12 Middle Eastern oil-producing countries and 11 non-Middle Eastern oil-producing countries) announced plans to slightly increase supply at its next meeting, but the impact was limited.

Given the continued rebound led by technology stocks such as AI and semiconductors, a positive trend is also expected in the domestic stock market. The MSCI Korea ETF, which tracks the domestic market, rose 2.46%, and the Philadelphia Semiconductor Index climbed 2.74%.

However, there are expectations that profit-taking will occur through major events concentrated this week. Several major events are scheduled, including the US Federal Open Market Committee (FOMC) meeting, the Asia-Pacific Economic Cooperation (APEC) summit, and earnings announcements from the US big tech group known as 'M7,' all taking place from October 28 to 29 (local time). During this period, there is also analysis that temporary countervailing effects may arise, such as profit-taking by bullish investors and the disappearance of short-term catalysts, in response to recent market concentration.

Han Jiyoung, a researcher at Kiwoom Securities, predicted that the KOSPI would also open higher, buoyed by the easing of US-China tensions and positive news from Qualcomm and Nvidia, but would see sector rotation as the market digests short-term profit-taking amid a 'super week' wait-and-see sentiment following recent sharp gains.

He stated, "Rather than being speculative, this bull market is strongly supported by fundamentals and macroeconomic factors. However, we cannot overlook the burden of the rapid short-term pace, so a period of consolidation may occur, potentially slowing the momentum of gains. Nevertheless, the combination of earnings, policy, and liquidity as upward drivers for the KOSPI remains valid, and any market correction this week or in the near future is expected to take place without threatening the existing upward trend of the index."