[Good Morning Stock Market] US Pfizer Vaccine Emergency Use Authorization... "Focus on FOMC Results"

Pfizer's novel coronavirus disease (COVID-19) vaccine (Photo by AFP)

[Asia Economy Reporter Kum Boryeong] The United States has approved the emergency use of Pfizer's novel coronavirus disease (COVID-19) vaccine. Vaccinations for millions, primarily in high-risk groups, are expected to begin within days. It is analyzed that the domestic stock market will be significantly influenced by Brexit (the United Kingdom's withdrawal from the European Union) issues and the Federal Open Market Committee (FOMC) meeting.

◆ Park Sanghyun, Researcher at Hi Investment & Securities = With the U.S. Food and Drug Administration (FDA) approving the emergency use of Pfizer's COVID-19 vaccine, vaccinations for millions are expected to start within days. The U.S. became the sixth country to approve the Pfizer vaccine, following the United Kingdom, Canada, Bahrain, Saudi Arabia, and Mexico, and the European Union (EU) is also expected to approve its use within a few weeks. Moreover, Moderna's vaccine is also receiving FDA approval. If vaccinations proceed smoothly, it is anticipated that over 70% of the U.S. population will have immunity to COVID-19 by next summer, achieving herd immunity.

Despite the welcome news of the start of vaccinations, the spread of COVID-19 remains severe. On the 11th, the U.S. reported 231,775 new COVID-19 cases, setting another record high. The daily death toll also reached a record high of 3,309. The problem is that the COVID-19 situation in the U.S. could worsen until early next year when vaccinations become widespread.

This COVID-19 situation inevitably burdens the U.S. economic recovery. Although the fourth-quarter U.S. GDP growth rate remains favorable, some indicators are showing a slowdown as the COVID-19 spread intensifies. Notably, weekly new unemployment claims have worsened. In the first week of December, new unemployment claims rose by 141,000 from the previous week to 853,000.

Although agreement is delayed, the existing outlook that additional U.S. fiscal stimulus and the calming of COVID-19 due to widespread vaccination will lead to a strong recovery in both the U.S. and global economies remains valid. However, given the high likelihood that the COVID-19 resurgence will continue until early next year, it is necessary to prepare for a short-term economic slowdown risk or a temporary fluctuation in economic indicators. In particular, a slowdown in consumer spending centered on the service sector is likely to occur until early next year.

However, after a temporary economic slowdown phase in early next year, a strong rebound in the U.S. and global economies will begin in earnest. This is because the Biden administration's inauguration may strengthen stimulus measures, and increased mobility due to large-scale vaccinations will lead to so-called pent-up consumption.

◆ Seo Sangyoung, Researcher at Kiwoom Securities = The Korean stock market is expected to fluctuate depending on news related to the FOMC and political developments in Europe and the U.S. The market still holds expectations for additional U.S. stimulus and budget agreement negotiations, but uncertainty about the outcomes remains, making increased volatility inevitable.

Furthermore, attention should be paid to the results of Brexit negotiations between the United Kingdom and the EU. Depending on the outcome, volatility in the foreign exchange market may increase. This could affect foreign investor flows in the Korean stock market depending on whether the dollar weakens or strengthens.

Meanwhile, the market expects the Federal Reserve (Fed) to announce additional stimulus measures through the FOMC, as the explosive increase in COVID-19 cases in the U.S. raises the possibility of economic contraction. If the Fed announces additional stimulus, it could positively impact foreign investor flows, but many analyses suggest this may already be somewhat priced in, so profit-taking sales cannot be ruled out.

Considering this, the Korean stock market is expected to experience significant volatility throughout the week: Brexit issues in the early week, U.S. additional stimulus and budget negotiations in midweek, and the Fed's FOMC results in the latter part of the week.

This content was produced with the assistance of AI translation services.