[Good Morning Stock Market] Mixed Close in US Stocks as Powell Turns 'Less Hawkish'... "KOSPI Expected to Start Lower"

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), stated that "the possibility of a rate hike is low," and amid the mixed close of the U.S. stock market, the KOSPI is expected to start lower on the 2nd.

On the 2nd, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 37,903.29, up 87.37 points (0.23%) from the previous trading day. The S&P 500, focused on large-cap stocks, fell 17.3 points (0.34%) to 5,018.39, and the Nasdaq, centered on tech stocks, closed down 52.34 points (0.33%) at 15,605.48.

[Image source=Reuters Yonhap News]

Immediately after the Federal Open Market Committee (FOMC) meeting and Powell's press conference, the Dow Jones Industrial Average extended its gains, while the previously declining S&P 500 and Nasdaq reversed to rise. Powell's remarks, which were more dovish (favoring monetary easing) than expected, are seen as partially easing investors' concerns about strong inflation.

Han Ji-young, a researcher at Kiwoom Securities, said, "Judging by the results alone, this FOMC meeting press conference has a strong negative impact on the stock market. It is true that Powell's hawkish (favoring monetary tightening) stance has intensified compared to the market-friendly position he showed at the March FOMC," but added, "The increase in hawkishness by the FOMC had already been priced in during last month's financial market turmoil, so this FOMC outcome is a neutral result that aligns with the base scenario, neither more nor less."

Kim Ji-won and Lim Jeong-eun, researchers at KB Securities, noted, "During Powell's briefing, the U.S. index surged over 1%, but fell after his remarks ended, confirming diminished trust in his statements. After the U.S. market closed, the yen plunged by over 4 yen, indicating concerns about foreign exchange intervention, and a similar trend is expected to be reflected domestically," adding, "Considering increased exchange rate volatility, the FOMC results, and the sharp drop in oil prices, selling pressure is expected to be absorbed."

By individual stocks, Amazon's earnings performed relatively well, but companies such as AMD, Starbucks, and Super Micro Computer posted weak results and recorded significant declines. AMD fell 8.95% despite reporting earnings in line with market expectations. Super Micro Computer dropped 14.03% after reporting earnings below expert forecasts. Qualcomm fell 1.1% during regular trading but rose over 4% after releasing earnings post-market close.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) and MSCI Emerging Markets Index ETF rose 0.1%. Eurex KOSPI 200 futures fell 0.6%.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The KOSPI is expected to start down 0.3?0.7%. The neutral FOMC outcome and semiconductor-centered selling pressure could increase downward pressure on the domestic market in the early session," adding, "The rapid improvement in Korea's export economy, centered on semiconductors, is expected to partially offset the downward pressure, but a 'conservative' sentiment will still dominate."

Han, a researcher, forecasted, "The preference of foreign investors for the domestic stock market is expected to continue. It is necessary to view positively the continuity of profit momentum in Korea's key industries confirmed in last month's exports," and predicted, "Ultimately, the May FOMC is unlikely to deliver additional negative external shocks to the stock market, and as before the FOMC, the market will enter a phase influenced by corporate earnings events and economic indicator events."

Meanwhile, the 1-month Non-Deliverable Forward (NDF) won-dollar exchange rate in New York stood at 1,328.57 won, and the won-dollar exchange rate is expected to start 6 won lower on the day.