[Good Morning Stock Market] New York Stock Market Rebounds After Christmas... Omicron Concerns Eased

S&P 500 Hits Record High for 2 Consecutive Trading Days
Mastercard "Year-End Shopping Season Retail Sales Up 8.5% Year-on-Year"

[Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] After the Christmas holiday, the New York stock market collectively rebounded. Although the new COVID-19 variant virus ‘Omicron’ is spreading, concerns appear to be alleviated as no economic lockdowns have been implemented.

On the 27th (local time), the New York stock market rebounded. On this day at the New York Stock Exchange, the Dow Jones Industrial Average closed at 36,302.38, up 0.98% (351.82 points) from the previous trading day. The S&P 500 index closed at 4,791.19, up 1.38% (65.40 points) from the previous session. The S&P 500 recorded an all-time high for two consecutive trading days based on closing prices and has set a record high 69 times so far this year. The tech-heavy Nasdaq closed at 15,871.26, up 1.39% (217.89 points) from the previous trading day.

◆ Seo Sang-young, Researcher at Mirae Asset Securities = Although a large number of flights were canceled due to the Omicron impact, UK Prime Minister Boris Johnson stated that no further economic lockdown measures would be announced. Although many health experts have expressed opinions that measures should be strengthened as the number of new COVID-19 cases in the UK exceeds 100,000, Prime Minister Johnson’s announcement eased related concerns.

Improved consumption toward the end of this year also positively influenced investment sentiment. Despite supply chain issues and the spread of COVID-19, according to Mastercard, retail sales during the year-end shopping season increased by 8.5% compared to the previous year and by 10.7% compared to 2019. Specifically, clothing sales rose by 47%, and electronics by 16%. Online sales also surged by 11% compared to the previous year and by 61% compared to 2019.

The declining savings rate also indicates that the public is focusing on consumption. The US savings rate in November was 6.9%, down from 7.3% in October. Despite high inflation, supply chain problems, and the spread of Omicron, the sharp increase in retail sales is seen by the market as an unusual phenomenon. However, it also reflects the resilience of the US economy, boosting confidence in the economy. This ultimately stimulated risk asset preference in the stock market, commodity futures market, and foreign exchange market.

(Provided by Samsung Securities)

◆ Seo Jeong-hoon, Researcher at Samsung Securities = The New York stock market continued its upward trend centered on large technology stocks. Large-cap tech stocks at the top of the Nasdaq market capitalization showed particularly strong performance. Apple rose 2.3%, bringing its market cap close to $3 trillion (approximately 3,564 trillion KRW). Microsoft and Tesla recorded gains in the 2% range, Meta rose 3.3%, and Alphabet increased by 0.7%.

The semiconductor sector also showed gains. Nvidia rose 4.4%, AMD 5.6%, and Applied Materials 4.6%. However, reopening-related stocks showed mixed results. Travel and airline stocks were weak, but retailers like Macy’s showed an upward trend.

Although the Omicron spread continues, major countries are prioritizing limited quarantine measures instead of lockdowns. France has mandated working from home three days a week starting January next year, and US President Joe Biden is actively encouraging COVID-19 testing. The US giant investment bank Goldman Sachs has decided to mandate booster shots and twice-weekly COVID-19 testing for its employees.

◆ Ahn Ye-ha, Researcher at Kiwoom Securities = The dollar closed slightly stronger against major currencies. However, amid the year-end market, factors that could further expand the dollar’s strength were limited, resulting in fluctuations within a narrow range. The foreign exchange market is presumed to still have high uncertainty due to the increased number of COVID-19 cases during the Christmas holiday. Additionally, expectations for interest rate hikes by the US Federal Reserve (Fed) continue.

Meanwhile, the pound sterling showed strength against the dollar as expectations for further rate hikes by the Bank of England, the UK’s central bank, were reflected for next year.