[Good Morning Market] Focus on Trump's Davos Remarks... Korea Challenges the 'Five Thousand Point' Breakthrough

U.S. Markets End Slightly Lower Despite Semiconductor Rally Last Week
Focus on Trump’s Upcoming Remarks at Davos Forum
Packed Week for Corporate Earnings and Economic Data
KOSPI Set to Challenge 5,000 Amid Upward Pressure and FOMO

Yonhap News

Last week, the New York stock market closed slightly lower despite a semiconductor rally. The market is closely watching the actions of U.S. President Donald Trump, leading to a wait-and-see atmosphere. Analysts suggest that the domestic stock market may also experience a clash between concerns over a short-term surge and FOMO (fear of missing out) sentiment as the KOSPI approaches the 5,000 mark.

On the 16th (local time) at the New York Stock Exchange (NYSE), the S&P 500 index closed at 6,940.01, down 0.06% from the previous session. The Dow Jones Industrial Average also fell by 0.17% to 49,359.33. The tech-heavy Nasdaq Composite Index ended at 23,515.39, a slight decrease of 0.06%. All three indices showed a slightly weaker trend for the week as well.

As concerns about market highs accumulate, even when the indices rise, the upward momentum does not last long. The strength was concentrated in artificial intelligence (AI) and semiconductor stocks, such as Broadcom and Micron Technology, due to a shortage of memory semiconductors.

President Trump’s remarks suggesting that he would exclude Kevin Hassett, Chairman of the White House National Economic Council (NEC), from the list of candidates for the next Federal Reserve (Fed) Chair also weighed on the market. Until recently, the market had considered dovish Hassett as the leading candidate, but now former Fed Governor Kevin Warsh, known for his hawkish stance, has emerged as the frontrunner. Regardless of who is chosen, expectations are that controversy over the Fed’s independence will not be easily resolved, increasing uncertainty surrounding the Fed. As a result, the U.S. 10-year Treasury yield surpassed the 4.2% range, and the stock market was shaken.

This week (January 19-23), President Trump’s remarks are expected to be the biggest variable for the New York stock market. President Trump is scheduled to attend the World Economic Forum (WEF) in Davos, Switzerland, and deliver a special speech on the 21st. He is expected to address major diplomatic and economic issues such as anti-government protests in Iran, the situation in Venezuela, and the potential purchase of Greenland.

Corporate earnings reports and various economic indicators will also be in focus. On the 19th, the New York stock market will be closed for the federal holiday, Martin Luther King Jr. Day. After that, Netflix will announce its earnings on the 20th, followed by Intel’s fourth-quarter results on the 22nd. On the same day, the revised figure for the U.S. real gross domestic product (GDP) for the fourth quarter of last year and the personal consumption expenditures (PCE) price index for October-November will be released. On the 23rd, preliminary U.S. service and manufacturing purchasing managers’ index (PMI) figures for January, published by S&P Global, will be announced.

The KOSPI has continued to show strong gains since the beginning of the year, surpassing 4,800 at a record pace. With client deposits hovering around 90 trillion won, liquidity conditions are ample, leading to expectations that breaking through the symbolic KOSPI 5,000 level is only a matter of time. As Micron Technology hit a new all-time high last week, the market is expected to attempt to enter the 4,900 range, led by semiconductor stocks, starting today.

Previously, on the 16th, the MSCI Korea ETF, which moves similarly to the domestic stock market, rose by 1.05%. The Philadelphia Semiconductor Index also climbed by 1.15%.

Han Ji-young, a researcher at Kiwoom Securities, stated, “As long as the combination of solid earnings momentum and low valuation pressure remains intact, the upward trend in the stock market is expected to continue. However, it is important to note that a wait-and-see atmosphere may occasionally emerge as concerns over the speed of the short-term surge and the spread of FOMO sentiment clash.”