U.S. stocks lead gains in small and medium-sized stocks on solid investor sentim

U.S. stocks lead gains in small and medium-sized stocks on solid investor sentiment

The U.S. stock market started higher on the back of a positive outlook for the economy based on the number of housing starts based on good investor sentiment. Of course, some of the stocks were released due to concerns about the possibility of an "early rate cut" by Fed members, but the related impact was not significant, expanding the gains again. Although some large technology stocks, including Nvidia (-0.94 percent), were generally sluggish, the Russell 2000 index rose as much as 1.94 percent due to the strong performance of most stocks, especially small and medium-sized stocks, reflecting solid investor sentiment, driving the rise of the U.S. stock market (Dow +0.68 percent, Nasdaq +0.66 percent, S&P 500 +0.59 percent, Russell 2000 +1.94% and Philadelphia Semiconductor Index +0.53%)

* Variables: Solid performance Vs. Unnerving performance

The number of housing starts in the U.S. in November rose sharply to 1.56 million, up from 1.359 million announced last month. The number of detached houses surged 18 percent month-on-month, and most regions saw growth. The number of permits, which serve as a leading indicator, slowed mainly for multi-family houses, but the impact was limited. As mortgage rates fell due to falling interest rates, the number of homes started to rise, driving inventory growth. This boosted the positive outlook for the economy and drove the stock market to rise.

However, it is worth noting that 62% of U.S. consumers are currently paying for living expenses through credit card loans without savings after exhausting excess savings. One of the words that appear a lot in recent Fed members' remarks is "delinquency," and this consumption behavior can add to household financial difficulties. In fact, the use of card revolving services increased to 43% from last year, and the use of pre-purchase and post-payment services also surged. In the meantime, it is necessary to keep an eye on the possibility of slowing consumption in the future as credit card delinquency is increasing, which could put a burden on the economy.

Meanwhile, Thomas Barkin, governor of the Federal Reserve Bank of Richmond, said, "There is considerable progress in inflation, but it is too early to discuss a rate cut." Recently, Fed members have been making remarks since the FOMC that they should be wary of excessive reflection of the market's Fed policy, but market participants are turning a blind eye to it. This is presumed to be because investor sentiment is solid and they are less sensitive to negative materials. In the end, the stock market is rising day after day on solid investor sentiment, but the possibility of increased volatility cannot be ruled out amid concerns about the economy if consumption slows down in the future. Considering this, we believe that we should actively respond to risk management.

* Features: Solar sector strength Vs. Nvidia slumps

Nvidia (-0.94%) is currently dominating the AI chip market, but Intel (+2.12) announced plans to launch a new Gaudi3 chip last week, raising concerns over intensifying competition. Another burden is that Alphabet (+0.66%) released Cloud TPU v5p with Geminai on the 6th and used it for Geminai education. The fact that Alphabet is wary of intensifying its dependence on Nvidia was highlighted. Tesla (+2.04%) rose on news that the U.S. electric vehicle charging method will be standardized like Tesla.

Pet goods seller Chewy (+9.23%) surged after Jefferies initiated coverage with a buy-in opinion, claiming that profit improvement would be driven by product premiumization. Affirm Holdings (+15.47%), a pre-purchasing company, surged on the back of the announcement that it would expand its partnership with Walmart (-0.42%). PayPal (+2.51%) and Sezl (+27.52%) also rose. Coinbase (+5.04%) a cryptocurrency exchange, strengthened on the back of Compass Point raising its target stock price, saying that higher cryptocurrency prices would lead to better profit.

Solar companies Sunnova (+14.96 percent) and Sunrun (+8.37 percent) surged after Piper Sandler announced that falling interest rates would serve as a positive catalyst for solar companies. First Solar (+4.05 percent) and Solar Edge (+9.37 percent) also rose, while Infase Energy (+9.10 percent) also gained ground due to news of restructuring. Macy's (+1.00 percent), a department store company, strengthened after Morgan Stanley raised its target stock price, claiming that the stock bottomed due to recent sales.

Pfizer (+4.07%), a pharmaceutical company that announced an optimistic 2024 forecast last week, is currently undervalued and has risen on Citigroup's analysis that its 2024 profit will be better than expected. This has led to strength at the same time for related vaccine companies BioNTech (+3.03%) and Moderna (+4.30%).

* South Korean stocks: Attention paid to China's LPR rate decision

The MSCI Korea Index ETF rose 1.12%, the MSCI Emerging Index ETF rose 0.85%, the Philadelphia Semiconductor Index rose 0.53%, the Russell 2000 rose 1.94%, and the Dow Transportation Index rose 0.89%. On top of that, the futures of Eurex KOSPI200 are expected to rise 0.48%, with the Korean stock market expected to start up around 0.5%. In addition, the NDF dollar/won exchange rate for one month is 1,299 won, which is expected to have a positive impact on foreign supply and demand as the dollar/won exchange rate is expected to fall by 8 won.

Meanwhile, China's LPR rate decision, which is expected to be frozen in the market, is underway today, and some do not rule out the possibility of a surprise cut in consideration of negative prices. Recently, various policies have been implemented to address the sluggish domestic demand of the Chinese government, but the impact of related policies has been limited due to weak consumer sentiment. For this reason, the People's Bank of China's announcement after the decision on the LPR rate is likely to change the Chinese stock market, which could affect the direction of the Korean stock market, drawing attention

* FICC: Oil prices rise, dollar weakness, interest rates fall

International oil prices continued to rise in the aftermath of the suspension of the Red Sea route due to the Houthi rebels' intensifying attacks, and oil products such as gasoline and heating oil were also strong. On the other hand, U.S. natural gas weakened due to the previous day's rise, and European natural gas prices plunged, ignoring concerns over the suspension of the Red Sea route and paying attention to abundant supply and mild temperatures.

Gold rose on a weaker dollar basis. Silver and copper rose on confidence in the U.S. economy, but aluminum fell on news of a roughly 15% increase in LME inventories. Other nonferrous metals were mostly strong based on a weaker dollar. Soybeans were strong on news of production disruptions in Brazil the previous day, but fell today on a return. Corn also fell, but wheat rose on the back of a weaker dollar

The dollar weakened against other exchange rates, reflecting the Fed's possibility of a rate cut, but the weak yen limited the dollar. The yen's weakness against the dollar expanded as there was nothing special at the BOJ's monetary policy meeting. The euro strengthened against the dollar as ECB members continued to make remarks that weakened the possibility of a rate cut, and the pound strengthened due to improved indicators. The Australian dollar strengthened against the dollar on the reference to a rate hike at the Australian Monetary Policy Conference, and the Canadian dollar strengthened against the dollar on the rise of the consumer price index

The interest rate on government bonds falls, reflecting the Fed's outlook for a rate cut. Changes in short-term goods are limited due to improved economic indicators and Fed members' comments that there is no early rate cut. However, long-term goods are also characterized by differentiation, such as falling, reflecting concerns over a slowdown in the economy caused by an increase in the delinquency rate of consumers.