[Good Morning Stock Market] US to Cut Interest Rates Three Times Next Year... "KOSPI Expected to Rise"

[Image source=Yonhap News]

On the 14th, the Korean stock market is expected to show strength in both growth stocks and large-cap stocks. This follows the U.S. Federal Reserve (Fed) indicating at the December Federal Open Market Committee (FOMC) meeting that it may cut interest rates three times next year. The press conference by Fed Chair Jerome Powell was also interpreted as dovish (favoring monetary easing), which is expected to influence the U.S. stock market to close higher.

On the previous day (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 37,090.24, up 512.30 points (1.4%) from the previous session, surpassing the 37,000 mark for the first time ever. The S&P 500 index rose 63.39 points (1.37%) to 4,707.09. This is the first time since January this year that the S&P 500 has exceeded the 4,700 level. The Nasdaq Composite, which is tech-heavy, closed up 200.57 points (1.38%) at 14,733.96.

On this day, the Fed announced after its final FOMC regular meeting of the year that it would maintain the benchmark interest rate at the current 5.25?5.50%. This marks the third consecutive hold following September and November. Notably, the year-end benchmark interest rate for next year, which was a market focus, was projected at 4.6% (median), 0.65?0.90 percentage points lower than now. This implies that there could be three rate cuts instead of the previously expected two.

Due to the more dovish-than-expected December FOMC, the domestic stock market is also expected to show strength. From a technical perspective, the KOSPI successfully settled above the 200-day moving average, a mid-to-long-term trend line, around the end of November, but has yet to enter the next resistance level and long-term trend line, the 200-week moving average (2,600 points).

Han Ji-young, a researcher at Kiwoom Securities, analyzed, "Although the KOSPI had been trapped in a box range due to Fed policy uncertainties, considering the December FOMC details, the KOSPI is expected to break out of the box range in the short term."