January FOMC, no additional stimulus measures expected
“Performance Season, should pay attention to small and medium-cap stocks”
Photo = Getty Image Bank
Last week, KOSPI was warmed by the booming US stock market with the inauguration of US President Joe Biden. However, in the supply-demand battle between individuals, institutions, and foreigners, it was also showing a breathtaking market.
This week (25-29) is expected to pay attention to the US Federal Open Market Committee (FOMC) in January and companies’ 4Q earnings announcements.
According to the Korea Exchange on the 24th, the KOSPI last week closed at 3140.63, up 1.77% from the previous week. The launch of the Joe Biden administration had a positive impact on the domestic market.
During the same period, the New York stock market also showed an uptrend. The Dow index rose by 0.6% last week, the S&P 500 rose by about 1.9%, and the Nasdaq rose by 4.2%. It is interpreted that the optimistic atmosphere following the inauguration of US President Biden had an effect on the stock market.
However, the domestic stock market, which showed a sharp rise, is somewhat calming down. This week, the KOSPI is expected to move between 3120 and 3220 points. The US economic stimulus and solid individual supply and demand are expected to contribute to the domestic stock market’s rise.
On the 20th (local time) in the United States, the Biden government was launched. Finance Minister Janet Yellen said he would not push for any increase until the economy recovers sufficiently, allowing the stock market to feel more comfortable waiting for the announcement of the stimulus package.
Since the beginning of the year, individual investors have been playing a supporting role in defending the institutional selloff by net buying 12.4 trillion won in the KOSPI market. Although there are concerns that individual purchasing power may be exhausted too quickly, stock price analysts say that individual investors still have high purchasing power given the scale of household net savings.
The most noteworthy event this week is FOMC, which is scheduled for 26-27 (local time). Stock prices are weighing on the expectation that there will be no additional stimulus measures in this FOMC. However, as it is the first meeting since the inauguration of the Biden government, interest is expected to draw attention to how President Jerome Powell of the US Central Bank (Fed) speaks on the current monetary policy stance.
Given that the recent long-term interest rate rebound is acting as a weakening factor for risky assets preference, financial market participants are hoping the Fed will show its willingness to further ease. However, there is a prospect that it is difficult to meet market expectations at this FOMC.
Lim Hye-yoon, a researcher at KTB Investment & Securities, said, “Reinforcing guidance to maintain the current asset purchase scale and remarks by Chairman Powell that it is not yet the time to discuss the exit strategy can relieve concerns about the weakening of the easing intensity, but does not guarantee further easing.” If the gap between the company’s stance and market expectations is highlighted, it is important to keep in mind the possibility of weakening the preference for risky assets and increasing volatility.”
Full-scale 4Q results are also scheduled to be announced. In the US, a positive atmosphere has been formed as the recently announced financial stock performance exceeded market expectations. In Korea, it may be difficult to produce a surprise as strong as the US, but it is predicted that the market atmosphere will not suddenly deteriorate.
Ahn So-eun, a researcher at IBK Investment & Securities, said, “The variable that influences the stock price will shift from interest rates to performance. Given the calming down of the spread of Corona 19, the base effect on the indicators in the first half, and the promotion of stimulus measures in major countries, it is easy to expect earnings improvement this year. It won’t break,” he said.
LG Chem in Korea(975,000 -1.32%)And Hyundai(257,000 -2.84%)A number of performance announcements are scheduled for leading stocks, including the US, and the results of tech companies are announced in the US.
Dae-hoon Han, a researcher at SK Securities, said, “As the resumption of short selling, which is one of the biggest concerns in the first half of this year, is expected to be achieved by giving large stocks, it is a time when individual investors can be interested in small and medium-cap stocks. It is a time when small and mid-cap stocks, which are attractive in terms of the auto industry, and supply and demand, can draw attention in the short term.
[email protected] Reporter Eunji Cha, Hankyung.com