[Good Morning Stock Market] US Democrats Achieve Blue Wave... Impact on Domestic Stock Market

[Image source=Yonhap News]

[Asia Economy Reporter Ji-hwan Park] The US Democratic Party has succeeded in achieving a 'Blue Wave' by taking control of the Senate following the White House and the House of Representatives. In the US stock market, expectations for additional fiscal expansion were expressed. On the 6th (local time), the Dow Jones Industrial Average closed at an all-time high. The index closed at 30,829.40, up 437.80 points (1.44%) from the previous session. The Standard & Poor's (S&P) 500 index also closed at 3,748.14, up 21.28 points (0.57%). The Democratic Party's control of the Senate is interpreted as raising expectations that more economic stimulus measures, including an additional $600 billion relief package, will be announced soon.

Domestic stock market experts predict that the achievement of the US Blue Wave will have a positive effect on the Korean stock market both in the short and long term. However, they analyze that rather than an overall upward trend, there will be sector- and stock-specific market movements.

◆ Yeon-ju Jo, Researcher at NH Investment & Securities = The Democratic Party's control of both houses in the US will have a positive impact on the Korean stock market. In the near term, additional stimulus measures are expected, and in the longer term, large-scale investment spending is anticipated. This is a factor that will strengthen the stock market's rise this year.

The rally period for environment and infrastructure-related stocks will be brought forward. When the Democratic Party did not control both houses, investors wanted to confirm that environmental and infrastructure investment bills would actually pass through Congress. However, now there is no obstacle to the Biden administration's large-scale investments.

◆ Sang-young Seo, Researcher at Kiwoom Securities = The US stock market showed strength centered on bank stocks, industrials, steel, energy, and materials sectors based on the Blue Wave, and especially the Russell 2000 index, a small- and mid-cap index, surged 3.98% amid spreading expectations for additional stimulus measures, which is expected to have a positive impact on the Korean stock market. However, since the actual rise is presumed to be focused on earnings, this trend is expected to continue in the Korean stock market as well.

Considering that some of this was priced in the previous day, the index is expected to start with a slight rise. Given the slowdown in US employment indicators and the resulting slow pace of economic recovery, as well as concerns about social division in the US, rather than expanding the rise, differentiation by stock and sector is expected to continue.

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