The U.S. Federal Open Market Committee (FOMC) decided to slow down the rate of interest rate cuts for 2025 during its December regular meeting, causing a sharp decline in the New York stock exchange as well as in the KOSPI 200 night futures options index.
The KOSPI 200 night futures options index closed at 324.65 at 5 a.m. on the 19th, down 4.9 points (1.49%) from the previous day. The Morgan Stanley Capital International (MSCI) Korea Index exchange-traded fund (ETF) 'EWY,' listed on the New York stock exchange, also fell 2.73% overnight.
The exchange rate surged. The won-to-U.S. dollar exchange rate rose to 1439.1 in the Seoul foreign exchange market's overnight trading, while the one-month won-dollar contract in the non-deliverable forward (NDF) market jumped to 1455.6 won.
The results of the FOMC showed a 'hawkish stance (preference for monetary tightening).' The Federal Reserve (Fed) presented a median forecast for the 2025 benchmark interest rate at 3.9%, a 0.5 percentage point increase from the September forecast of 3.4%. This halved the number of anticipated interest rate cuts for 2025 from four 'baby cuts (a 0.25 percentage point cut)' to two. The median forecast for the 2026 benchmark interest rate was also raised from 2.9% to 3.4%, indicating that interest rate cuts may not occur as quickly as the market expects.
The three major U.S. indices also plummeted following the FOMC results. This is expected to weigh on emerging markets, including South Korea. The Dow Jones Industrial Average fell by 1123.03 points (2.58%) in just one day. This marks the first time it has fallen for ten consecutive trading days since 1974. Overnight, the Nasdaq Composite and the Standard and Poor's (S&P) 500 indices also dropped by 716.37 points (3.56%) and 178.45 points (2.95%), respectively.
The revenue forecast for the second quarter of Micron Technology's (Micron) fiscal year 2025 (December 2024 to February 2025) is also below market expectations, potentially putting pressure on the domestic market. This is because Micron is among the first major semiconductor corporations to report earnings and is considered a 'semiconductor bellwether.'
After the U.S. stock market closed, Micron indicated a central value of $7.9 billion for its revenue guidance for the second quarter of fiscal year 2025. This fell short of the market expectation of $8.94 billion. Micron's stock price dropped by approximately 12.56% in after-hours trading at 5:25 a.m. on the 18th.