[Good Morning Stock Market] US Stocks Close Mixed Amid Concerns Over COVID Variant

Domestic Stock Market Expected to Start Slightly Higher... Foreign Investors' Supply and Demand Slows, Reducing Upward Momentum

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The U.S. stock market closed mixed amid weak consumer indicators and concerns over new variants of COVID-19. The domestic stock market is expected to open slightly higher, but the continued decline in international oil prices is likely to weigh on foreign investor demand.

◆ Jaewon Choi, Kiwoom Securities Researcher= On the 22nd (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 30,015.51, down 0.67% (200.94 points) from the previous trading day. The S&P 500 also closed lower at 3,687.26, down 0.21% (7.66 points). In contrast, the tech-heavy Nasdaq Composite rose 0.51% (65.40 points) to close at 12,807.92, marking an all-time high both intraday and at closing. By sector, all sectors except IT (+0.86%) and real estate (+0.61%) declined. The energy sector (-1.74%) led the losses.

The U.S. stock market closed mixed due to weak consumer confidence and ongoing concerns about COVID-19 variants. The Conference Board's December Consumer Confidence Index recorded 88.6 points, falling short of last month's 92.9 points and the expected 97.0 points, raising concerns about a slowdown in year-end consumption. Additionally, worries about COVID-19 variants intensified. On the same day, Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases (NIAID), stated ahead of Moderna's COVID vaccine that variants have "clearly likely entered the U.S." and urged people to limit holiday travel plans during this year-end holiday season. Regarding other countries' bans on flights from the UK, he recommended that "it might be better to require testing before travel for tourists coming from the UK."

In the U.S. Senate, a $900 billion (approximately 1,000 trillion KRW) additional stimulus package was passed late the previous night, but President Donald Trump has not yet signed it. To prevent a government shutdown starting from that day, President Trump signed a short-term temporary budget for an additional week.

Meanwhile, Moderna (-8.98%) and Pfizer (-1.74%) stocks fell sharply following investigations into strong allergic reactions to their vaccines. Apple (+2.85%) continued its upward trend on news of autonomous electric vehicle production. Home training equipment company Peloton (+11.65%) announced it would acquire Precor for $420 million, leading to a surge amid expectations of expanded production capacity.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 1.57%, and the MSCI Emerging Markets Index ETF declined 0.80%. Considering this, the Korean stock market is expected to start slightly higher. In the New York offshore non-deliverable forward (NDF) market, the one-month won-dollar exchange rate was 1,108.06 won, suggesting the won-dollar rate will open higher in the domestic foreign exchange market as well. However, the continued decline in international oil prices is expected to remain a burden on foreign investor demand.

◆ Naye Lee, Korea Investment & Securities Researcher= After surpassing the 2,400 mark and recording positive weekly returns for seven consecutive weeks, the KOSPI, which was poised to reach 3,000, has stalled. The government's announcement of strengthened restrictions on outdoor activities due to a sharp increase in domestic COVID-19 cases and the rapid spread of a variant in the UK that is 70% more infectious than the original virus negatively affected investor sentiment.

The supply and demand outlook is also disappointing. Since last month, foreign investors, who led the KOSPI's rise by focusing on large-cap value stocks, have slowed their buying momentum. Although funds flowed into emerging markets including Korea as uncertainties over COVID-19 vaccines and the U.S. presidential election eased, concerns about the delay in economic recovery remain as long as the COVID-19 resurgence issue is unresolved. This limits further won appreciation and makes it difficult to expect strong foreign buying inflows again.

Although individual investors have abundant funds, they are unlikely to lead the KOSPI's rise. Since August, new credit loans, which had decreased during the consolidation phase, have started to increase again, causing some securities firms to halt new credit loans. As a result, the proportion of credit loans in individual investors' stock purchases is declining. While many investors are holding cash and waiting, the scope for aggressive investors using leverage has narrowed compared to before.

Moreover, the turnover rate of market capitalization, which rises when large-cap stocks are active, has not surpassed previous highs. Meanwhile, the turnover rate of listed stocks considering trading volume remains on an upward trend. This indicates that short-term trading is active mainly in relatively small-cap stocks, which inevitably reduces the index's influence. Therefore, a consolidation phase is likely to continue.

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