[Good Morning Stock Market] US Stocks Rise Ahead of Jackson Hole Amid Oversold Conditions... Focus on Bank of Korea Monetary Policy Meeting

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myunghwan Lee] On the 25th, the domestic stock market is expected to show a solid trend influenced by the U.S. stock market's rise ahead of the Jackson Hole meeting. The results of the Bank of Korea's Monetary Policy Committee (MPC) scheduled for the day and subsequent policy-related remarks are also expected to impact the market during trading hours.

On the 24th (local time) at the New York Stock Exchange, the Dow Jones Industrial Average closed at 32,969.23, up 0.18% (59.64 points) from the previous trading day. The S&P 500 index rose 0.29% (12.04 points) to 4,140.77, and the tech-heavy Nasdaq index ended trading at 12,431.53, up 0.41% (50.23 points).

Attention is advised on the results of the MPC's monetary policy direction meeting scheduled for 9 a.m. that day. Considering the domestic consumer price inflation rate exceeding 6%, the expected inflation rate above 4%, and exchange rate defense, the market consensus is that the MPC will raise the base rate by 0.25 percentage points. If the MPC decides to raise the rate on this day, it will be the first time in history to have four consecutive increases.

Jiyoung Han, Kiwoom Securities Researcher: "Focus on Bank of Korea MPC... Market direction to be decided after Jackson Hole meeting"

On the 25th, the domestic stock market is expected to show an upward trend supported by the rebound in the U.S. stock market, a decline in the won-dollar exchange rate, and favorable foreign demand, while Jackson Hole-related caution is likely to limit the index's upside.

At the Bank of Korea MPC scheduled for the day, a 0.25 percentage point rate hike is the consensus despite concerns about the sharp rise in the won-dollar exchange rate and U.S. rate hikes. Considering this, attention should be paid to any changes in comments by the Bank of Korea Governor regarding future policy directions during the subsequent press conference.

In the U.S. stock market, Nvidia, which announced earnings after the market close, recorded an earnings shock due to sluggishness in the gaming and PC markets, with after-hours stock prices falling more than 4%. This could negatively affect investment sentiment in domestic IT sectors such as semiconductors. However, since Nvidia had already signaled this quarterly earnings weakness through its August preliminary results, much of this has been reflected in the stock price, so the impact on Nvidia and related domestic IT stocks is expected to be limited.

Considering that market instability was triggered after the release of the July Federal Open Market Committee (FOMC) minutes late last week, it is judged that the short-term market direction will be decided after the Jackson Hole meeting. Given the rising probability of a 0.75 percentage point rate hike at the September FOMC, it is likely that Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), will adopt a hawkish stance regarding inflation response at the Jackson Hole meeting.

Sangyoung Seo, Head of Media Content Division, Mirae Asset Securities: "Positive rebound in U.S. stock market... Nvidia's decline is a burden"

On the 25th, the domestic stock market is expected to maintain a solid performance following a rise of around 0.5% at the start, supported by won strength.

Despite the U.S. stock market rising ahead of the Jackson Hole meeting amid expanding Treasury yields and renewed dollar strength, this is expected to have a positive effect on the Korean stock market. In particular, it is positive that Chairman Powell is expected to make remarks not significantly different from recent Fed officials' statements rather than announcing a new and more aggressive rate hike stance at the Jackson Hole meeting. Additionally, U.S. President Joe Biden's partial forgiveness of student loans and extension of the repayment freeze deadline are also favorable. This could positively influence U.S. consumption going forward, alleviating concerns about a slowdown in Korean exports.

Of course, considering the still high inflation and the expectation that the Fed's rate hike stance will not weaken, as well as the anticipated cautious sentiment ahead of the Jackson Hole meeting, a large influx of buying is unlikely. Furthermore, Nvidia's after-hours decline of more than 4%, despite a 61% surge in data center sales, is also a burden.

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