[Good Morning Stock Market] Nasdaq Up 4.4% on Powell's 'Speed Adjustment' Remarks... Will a US Stock Market Breeze Follow?

[Image source=AP Yonhap News]

[Asia Economy Reporter Myunghwan Lee] On the 1st, the domestic stock market is expected to start higher influenced by the strong performance of the U.S. stock market, which was boosted by Federal Reserve (Fed) Chair Jerome Powell's remarks the previous day.

On November 30th (local time), the Nasdaq index, centered on technology stocks, surged 4.41% (484.22 points) to close at 11,468.00 in the U.S. New York stock market. The Dow Jones Industrial Average rose 2.18% (737.24 points) to 34,589.77, and the S&P 500 index closed at 4,080.11, up 3.09% (122.48 points), ending a three-day losing streak.

The U.S. stock market, which had been flat until the morning session, began to rise sharply after Fed Chair Jerome Powell's speech at the Brookings Institution. Chair Powell suggested that "the time to slow the pace of rate hikes could come as early as December," indicating that the Federal Open Market Committee (FOMC) regular meeting next month might decide on a big step (0.50 percentage point increase) instead of a giant step (0.75 percentage point increase) in the benchmark interest rate.

Although the market had already widely expected the Fed to reduce the rate hike magnitude in December, attention was drawn to the fact that Chair Powell officially mentioned it.

Meanwhile, the Fed announced through the Beige Book, an economic assessment report, that economic activity had generally been revised downward, showing either flat or slight increases since the previous report. The Fed stated, "Economic activity was flat or slightly increased, lower than the modest average growth assessed in the previous report."

Sangyoung Seo, Head of Media Content at Mirae Asset Securities: "Strong upward trend amid solid momentum... November Korean exports are a burden"

[Image source=Yonhap News]

On the 1st, the domestic stock market is expected to continue its strong performance after starting with an increase of around 1.5%.

The Nasdaq's 4.4% surge, led by technology stocks, supported by Chair Powell's less hawkish remarks, is expected to have a positive impact on the domestic stock market. U.S. Commerce Secretary Gina Raimondo's comment that the U.S. does not seek decoupling from China and mentioned improving relations is also favorable. Such remarks raise expectations for easing U.S.-China tensions, which is a positive factor for the Korean stock market, which has significant exports to both countries.

However, November Korean exports, expected to record a negative figure, are likely to be a burden. This is because it is expected to stimulate concerns about a slowdown in corporate profits going forward. Nevertheless, the possibility of changes in China's 'Zero COVID' policy, expectations for easing U.S.-China tensions, and Chair Powell's remarks are expected to have an overall positive effect on investor sentiment.

Jiyoung Han, Researcher at Kiwoom Securities: "Powell's remarks are 'dovish'... Growth stocks expected to strengthen"

On the 1st, the domestic stock market is expected to show strength, supported by the surge in the U.S. stock market driven by Chair Powell's positive remarks and the sharp drop in the won-dollar exchange rate. However, a reversal of large-scale passive foreign inflows due to Morgan Stanley Capital International (MSCI) rebalancing is anticipated.

In the U.S. stock market, big tech and growth stocks such as Apple (4.8%), Alphabet (6.1%), and Tesla (7.7%) showed simultaneous strength due to the favorable factor of a sharp decline in market interest rates. Similarly, growth stocks such as platforms and software are expected to perform strongly in the domestic stock market. However, depending on the domestic November export results, which are scheduled to be announced before the market opens, the stock price trends among major sectors such as semiconductors, secondary batteries, and automobiles are expected to differentiate.

Chair Powell's recent speech appears to have been interpreted by the market as not only less hawkish but dovish. He expressed the stance that, since inflation remains high and the outlook is uncertain, the Fed will maintain tightening until the mandate of price stability is achieved. While he indicated that premature rate cuts desired by the market seem inappropriate, he also mentioned that excessive tightening is undesirable. Notably, he expressed that the Fed does not want to pursue aggressive rate hikes that would destroy demand.

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