[Good Morning Market] US Stocks Slightly Lower Ahead of FOMC... Korean Market Expected to Take Wait-and-See Approach

Caution Ahead of the Final FOMC Meeting of the Year
KOSPI Expected to Show a Wait-and-See Trend

Ahead of the final Federal Open Market Committee (FOMC) meeting of the year, which will determine the US benchmark interest rate, US stock markets closed slightly lower across the board. The domestic stock market is also expected to show a wait-and-see approach, as it digests profit-taking following recent consecutive gains during the session.

On December 8 (local time) at the New York Stock Exchange, the S&P 500 index closed at 6,846.51, down 0.35% from the previous day. The Dow Jones Industrial Average also ended the day at 47,739.51, down 0.45% from the previous session. The technology-heavy Nasdaq index fell 0.14% during the same period, closing at 23,545.90.

Despite market expectations for a rate cut at this FOMC, a sense of caution prevailed, leading to a rise in the US 10-year Treasury yield to the 4.1% range and a subsequent decline in stock prices.

MarketWatch explained, "Yields on US Treasury bonds rose as expectations grew that the Federal Reserve may need to gradually cut rates in the future to firmly curb inflation," adding, "The yield on the 10-year Treasury reached its highest level since the end of September."

The market is treating a rate cut at the final FOMC of the year, scheduled for December 9-10 (local time), as a foregone conclusion. The current US benchmark interest rate stands at 3.75-4.0%. However, there is a heightened sense of uncertainty regarding next year's FOMC meetings. Since the New York Federal Reserve's expected inflation rate remains unchanged from the previous month at 3.2%, concerns are emerging that the Fed may continue its conservative policy stance.

By stock, Nvidia (up 1.72%) and Broadcom (up 2.78%) rose, while Alphabet, Google's parent company (down 2.29%), and Tesla (down 3.39%) declined. In Nvidia's case, reports that the US government is likely to permit exports of its artificial intelligence (AI) chip H200 to China acted as a positive factor. Netflix, despite successfully acquiring Warner Bros. Discovery, fell by 3.41% due to the possibility of being blocked by antitrust violations.

After posting a gain of over 1% the previous day, thanks to strong performances in leading sectors such as semiconductors and secondary batteries, the KOSPI is expected to show a wait-and-see trend. While semiconductor stocks like Nvidia and Broadcom performed strongly in the US market, caution surrounding the December FOMC may act as a downward factor. However, the MSCI Korea ETF, which closely tracks movements in the domestic market, rose by 0.82%, and the Philadelphia Semiconductor Index also climbed by 1.10%.

Han Ji-young, a researcher at Kiwoom Securities, said, "The KOSPI has regained the 4,100 level in December as stock prices have recovered, and leading stocks in semiconductors, machinery, and shipbuilding are also showing signs of recovery. Earnings forecasts are being revised upward, and net buying by foreign investors has resumed. Therefore, it would be appropriate to respond to external events concentrated in the middle of the week by making staggered purchases during any corrections."