U.S. stock market, international oil prices, etc. fall due to ‘preemptive reflection’ and ‘economic recession concerns’
Nvidia, etc. close lower… KOSPI with high proportion of semiconductors also faces backlash
The US Federal Reserve (FED) has decided on a ‘big cut’. The New York stock market fell despite the ‘pivot’ (change in monetary policy) for the first time in 4 years and 6 months since COVID-19. This is due to the ‘pre-reflection’ of expectations for a rate cut and the weight of ‘economic recession concerns’. There is a possibility that the domestic stock market will also face a backlash due to the implementation of the big cut.
On the 19th, the US Federal Reserve implemented a ‘big cut’ by lowering the base interest rate by 0.50%p. The US base interest rate will be lowered from the existing 5.25-5.50% to 4.75-5.00%. This is the first time since 2008, during the global financial crisis, that the Fed has set the rate cut rate at 0.5%p.
At a press conference that day, Federal Reserve Chairman Jerome Powell emphasized that this ‘big cut’ decision was a preemptive response and not due to an economic downturn.
“The U.S. economy is in good shape, growing at a solid pace and declining inflation,” Powell said. “This rebalancing of policy stance will help sustain the strength of the economy and labor market.”
This rate cut was in line with market expectations. As of 6 p.m. on the 18th, 10 hours before the announcement of the results of the Federal Open Market Committee (FOMC) monetary policy meeting, the Chicago Mercantile Exchange (CME) Group FedWatch reflected the probability of the Fed’s ‘big cut’ at 61.0%.
However, despite the rate cut meeting market expectations, the U.S. stock market closed lower. This is because the rate cut was already reflected in the market, and concerns about an economic recession did not subside despite Chairman Powell’s “explanation.”
In addition, the dot plot (interest rate forecast table) predicted only an additional 0.5%p cut by the end of this year, which also increased volatility.
Seo Sang-young, a researcher at Mirae Asset Securities, analyzed, “As Chairman Powell mentioned that the neutral rate could be higher than before, the possibility that the rate cut could be limited was highlighted, and volatility expanded, such as a downward turn.”
As not only the U.S. stock market but also international oil prices fell on this day, reflecting expectations of a rate cut in advance, the domestic stock market, which is also believed to have reflected expectations of a rate cut in advance, is also likely to show weakness.
In particular, as semiconductor stocks, including Nvidia, fell across the board on the New York Stock Exchange last night, KOSPI, which has a large proportion of semiconductor stocks, is also expected to show a downward trend. However, considering that the domestic stock market was closed during the Chuseok holiday when the U.S. stock market was on the rise, the decline may be minimal.
Researcher Seo said, “NVIDIA’s stock price turned upward after the Fed announced a 0.50%p rate cut, but as the market closed, a reversal came in and there was a sharp sell-off, closing down 1.88%.” He explained, “Most semiconductor stocks, including Super Micro Computer (-0.57%), Broadcom (-0.49%), and Qualcomm (-0.24%), rose after the interest rate cut announcement, but turned downward ahead of the market close.”
(Seoul = News 1)
-
- great
- 0dog
-
- I’m sad
- 0dog
-
- I’m angry
- 0dog
-
- I recommend it
- dog
Hot news right now
2024-09-19 15:17:31