[Good Morning Market] Market Holds Breath Amid Tapering Discussions

The Federal Reserve System, the monetary policy-making body located in Washington, USA.

[Asia Economy Reporter Junho Hwang] As pressure for early tightening increases, market tension has also heightened. Amid more frequent mentions of tapering (asset purchase reduction) by Federal Reserve (Fed) board members, the U.S. stock market closed mixed last week. This tension is expected to flow into the Korean stock market, which is significantly influenced by the U.S.

Sangyoung Seo, a researcher at Mirae Asset Securities Research Center, forecasted on the 24th, "The Korean stock market is expected to show a tendency of rapid sector rotation amid weakening upward momentum."

In the minutes of the April Federal Open Market Committee (FOMC) regular meeting released on the 19th (local time), many attendees stated, "If the economy continues to progress rapidly toward its goals, it may be appropriate to begin discussions on adjusting the pace of asset purchases at the upcoming meeting," leading to repeated mixed trends in both the U.S. and Korean stock markets. Fed board members are focusing on inflation. Rising prices increase tightening pressure on the Fed.

Accordingly, last week Robert Kaplan, President of the Dallas Federal Reserve Bank, mentioned that discussions on tapering should begin, and Patrick Harker, President of the Philadelphia Fed, also stated that it might be better to start discussions early and gradually remove easing measures.

According to a recent survey by the New York Fed, major U.S. banks expect tapering to begin in the first quarter of next year and the first interest rate hike to occur in the third quarter of 2023.

As opinions on tapering increased, the dollar index showed an upward trend, rising 0.3% to 90.03 points. The won-dollar exchange rate fell 0.4% to 1,127.0 won. On the 21st, the U.S. stock market saw the Dow rise 0.36% as inflation beneficiaries stood out, while the tech-heavy Nasdaq fell 0.48%, and the S&P 500 dropped 0.08%.

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