[Good Morning Market] Stock Market Rises as Omicron Lockdown Concerns Ease

[Image source=Yonhap News]

[Asia Economy Reporter Junho Hwang] As concerns over economic lockdowns related to the spread of the COVID-19 variant Omicron subside, the U.S. stock market showed strength on the 21st (local time). Attention is focused on whether the positive momentum will continue in the Korean stock market, which closed higher the previous day amid net buying by foreign investors.

On the 21st (local time), the Dow Jones Industrial Average rose 560.54 points (1.60%) to close at 35,492.70, the S&P 500 increased by 81.21 points (1.78%) to 4,649.23, and the Nasdaq Composite gained 360.14 points (2.40%) to finish at 15,341.09.

The market started higher based on improved earnings from individual companies, and gained momentum as negative factors from the previous day eased following U.S. President Joe Biden's speech on Omicron and his mention of a January vote on the social spending bill. In his address to the nation, President Biden reiterated the call for vaccinations against the variant virus and stated that measures such as economic lockdowns, which had worried financial markets, would not be implemented.

Min Geun Lee, a researcher at Cape Securities, said, "The U.S. stock market had been shaken by a triple whammy of the Federal Reserve's tapering, the spread of Omicron, and the failure of stimulus measures, but it seems to have found a lifeline for now." He added, "Growth stocks such as semiconductors and electric vehicles, as well as reopening-related sectors like airlines, cruises, and entertainment, all rebounded strongly, showing an overall warming trend."

The upward trend in the U.S. stock market is expected to have a positive effect on the domestic market as well. Sangyoung Seo, a researcher at Mirae Asset Securities, analyzed, "The Korean stock market rose the previous day, led by the semiconductor sector, after U.S. company Micron expressed confidence in the growth of the semiconductor industry in its earnings report." He continued, "With the easing of negative factors this week, the market expanded its gains again." He also noted, "The rise of reopening sectors in the U.S. market will act as a positive factor for the domestic market. The sharp rise in electric vehicle and solar power sectors also suggests strength centered on related stocks."

The dollar/won exchange rate, which had been pressuring the stock market, is also expected to weaken. Yumi Kim, a researcher at Kiwoom Securities, forecasted, "The dollar declined as concerns over Omicron eased, reducing the preference for safe-haven assets in financial markets despite rising government bond yields." She added, "The one-month dollar/won rate is expected to start 2 won lower at 1,191.43 won, and with the dollar weakening, the rise in the New York stock market, and the easing of safe-haven demand, the exchange rate is likely to show a downward trend."