[Good Morning Stock Market] US FOMC 'Relief Rally'... Return of Foreign Investors, Domestic Large-Cap Stocks 'Tailwind'

[Asia Economy Reporter Ji Yeon-jin] The U.S. stock market closed higher on the 27th (local time) as the Federal Open Market Committee (FOMC) raised the benchmark interest rate by 75 basis points. The Fed's 'giant step' was already priced into the market, and Federal Reserve Chairman Jerome Powell's remarks about the possibility of limited future rate hikes further boosted gains. The Dow Jones Industrial Average closed at 32,197.59, up 436.05 points (1.37%) from the previous session, the Standard & Poor's (S&P) 500 index rose 2.62%, and the tech-heavy Nasdaq index surged 4.06%.

◆ Sangyoung Seo, Researcher at Mirae Asset Securities = The rise in the U.S. stock market following the FOMC results is expected to have a positive impact on the Korean stock market. In particular, the weakening of the U.S. dollar after the FOMC is expected to continue strengthening the Korean won, which is favorable. This is presumed to be due to Chairman Powell's mention of gradual rate hikes and his expression of confidence in the economy, which is generally expected to positively influence foreign investor demand.

Additionally, the strong performance of big tech companies that reported earnings below expectations but showed strength due to increased cloud-related spending expectations is favorable as it raises the possibility of improved investment sentiment in the semiconductor sector. In the U.S. stock market the previous day, Microsoft (6.69%) and Alphabet (+7.66%), which reported disappointing earnings, rallied on growth expectations in the core cloud sector, leading to gains centered on other tech stocks and the semiconductor sector. Considering this, the Korean stock market is expected to start with about a 1% rise and maintain a solid performance.

◆ Jiyoung Han, Researcher at Kiwoom Securities = The domestic stock market is expected to show an upward trend centered on large-cap stocks today, supported by improved foreign demand conditions due to the relief rally in the U.S. stock market after the July FOMC and the decline in the USD-KRW exchange rate following the easing of dollar strength. However, Meta's (6.5%) earnings report released after the U.S. market close, which showed an earnings shock due to intensified competition with other platform companies and reduced advertising, causing its after-hours stock price to fall by about 4%, is a burden. Nevertheless, the solid second-quarter earnings reports from domestic companies such as Samsung Electro-Mechanics and LG Innotek, which announced results the previous day, are expected to offset this.

It is difficult to say that the Fed has shifted to a dovish stance, but since the policy intensity was presented at the level expected by the market, the stock market largely perceived this as the disappearance of a negative factor. Rather than having high expectations for a slowdown in the pace of rate hikes, it is appropriate to keep in mind that the Fed's rate hike path is variable depending on data and circumstances. Summarizing Chairman Powell's press conference, the Fed reaffirmed that it is fully committed to controlling inflation even if it causes economic slowdown. It is worth noting that he mentioned the possibility of abnormal or larger rate hikes in meetings after September, with decisions depending on inflation data collected in the future.

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