[Good Morning Stock Market] US Stocks Highlight Optimism on China Stimulus and Housing Data Expectations

[Image source=AP Yonhap News]

[Asia Economy Reporter Jihwan Park] The US stock market closed higher amid expectations fueled by the Chinese government's economic support and strong US housing data. In particular, the market closely monitored COVID-19 related developments and key economic indicators. The Chinese government has consistently announced economic support measures to counter the impact of COVID-19, and recent improvements in the housing market were also confirmed. The US January producer price index rose by 0.5%, significantly exceeding the market expectation of 0.1%.

◆Sangjae Lee, Researcher at Eugene Investment & Securities= The increase in new COVID-19 cases in China is slowing down. As seen in the expansion of COVID-19 infections in Japan, the situation is still ongoing. Currently, the global financial market's focus is on the extent of the economic cooling in China caused by COVID-19 and the speed of normalization. The US consumer economy is a strong driver of the continued expansion of the global economy in 2020. Underlying this is the solid performance of the employment market. US retail sales in January showed a robust increase on the surface. They rose by 0.3% month-over-month, in line with market expectations, expanding the growth rate compared to the previous two months. Core retail sales excluding automobiles and fuel also increased by 0.4% month-over-month in January, continuing the positive trend from December. Compared to the same period last year, they increased by 4.4% and 3.3%, respectively, maintaining the growth trend.

◆Yugyeom Kim, Researcher at Hanwha Investment & Securities=According to the minutes of the US Federal Reserve FOMC, members forecast that economic growth will continue moderately amid accommodative monetary policy and financial conditions. Recent uncertainties related to trade disputes have decreased, and reflecting this, the GDP forecast was revised upward. Inflation is also expected to reach the target due to solid economic growth and sustained employment. In particular, building permits recorded the highest level since March 2007. After being at around -3.9% at the end of December last year, it has turned to an increasing trend this year.