[Good Morning Stock Market] FOMC Minutes Without Discussion of Rate Cut... "KOSPI Expected to Start Lower"

US Stock Market Closes Lower Near Flat... Retailers' Earnings Disappoint
"KOSPI Expected to Open Down 0.5~0.8%"

Image source=AP·Yonhap News

The domestic stock market is expected to start lower on the 22nd due to the minutes of the U.S. Federal Reserve's Federal Open Market Committee (FOMC), which did not include any consideration of a benchmark interest rate cut.

On the 21st (local time), the U.S. stock market closed lower within a narrow range as it digested the FOMC minutes. Weak earnings forecasts from retailers also appeared to have influenced the decline. The Dow Jones Industrial Average fell 62.75 points (0.18%) to 35,088.29, the large-cap S&P 500 index dropped 9.19 points (0.20%) to 4,538.19, and the tech-heavy Nasdaq index closed down 84.55 points (0.59%) at 14,199.98.

The minutes of the Fed's November FOMC regular meeting showed no discussion of rate cuts. Fed officials maintained a cautious stance, stating that decisions must consider all incoming information, its impact on forecasts, and the balance of risks. The minutes noted that "most meeting participants remain aware of the risk of inflation reemerging" and emphasized the "need to keep monetary policy restrictive for the time being." Previously, the Fed held the benchmark interest rate steady at 5.25?5.5% for the second consecutive FOMC meeting. Market expectations for a freeze slightly weakened as hopes for the end of rate hikes and cuts next year had been spreading.

Additionally, retailers such as home improvement supplier Lowes, electronics retailer Best Buy, and apparel company American Eagle reported disappointing earnings. Lowes missed quarterly sales estimates and lowered its annual sales forecast. Best Buy also fell short of quarterly sales expectations and downgraded its annual sales outlook. American Eagle exceeded quarterly sales and net income estimates but its year-end quarterly operating profit forecast fell short of market expectations. Concerns about consumer spending contraction ahead of the year-end added to market disappointment over retail earnings reports.

The KOSPI is expected to open down 0.5?0.8% on the 22nd. Kim Seok-hwan, a researcher at Mirae Asset Securities, explained, "The domestic stock market has continued its upward trend with net buying by foreigners and institutions, especially with ongoing buying in semiconductors. This week, a shift in supply and demand toward secondary batteries has driven the index higher," adding, "The net buying entities have shifted from individuals to foreigners and institutions."

He continued, "The weekly average return of the secondary battery sector was 3.2%, outperforming the domestic market's 1.6%. It is necessary to confirm whether this supply and demand trend will continue, and attention should also be paid to the impact of Nvidia's earnings and guidance announced after market close."

Nvidia's Q3 revenue this year was $18.12 billion, surpassing Wall Street's forecast of $16.18 billion, representing a 206% increase year-over-year. However, Nvidia acknowledged that additional U.S. AI semiconductor chip regulations targeting China could have negative effects.

Han Ji-young, a researcher at Kiwoom Securities, said, "Despite a manageable FOMC minutes outcome, slowing housing indicators, and resulting interest rate declines creating a favorable macro environment, profit-taking pressure is expected to cause volatility within a limited range. From a sector perspective, it is necessary to assess the impact of Nvidia's after-hours earnings results on the domestic stock market."