Fed cuts policy rate by 0.25 percentage point… New York stocks end higher [Morning Briefing]

◆ Fed cuts policy rate by 0.25 percentage point… Outlook for cuts next year 'uncertain'

The U.S. central bank (Fed) on the 10th (local time) cut the policy rate by 0.25 percentage point, citing factors such as a slowdown in employment. The Fed said after the Federal Open Market Committee (FOMC) regular meeting that it decided to lower the policy rate from 3.75–4.00% to 3.50–3.75%. Nine of the 12 voting members voted in favor and three dissented. This is the third and third consecutive rate cut this year. Earlier, the Fed also cut by 0.25 percentage point in September and October. With this decision, the rate gap between Korea (2.50%) and the U.S. narrowed to 1.25 percentage points at the upper end. At this meeting, the last FOMC of the year, the Fed presented a median projected policy rate of 3.4% for the end of next year. Considering the year-end projection and the current rate, another 0.25 percentage point cut next year could be possible, but because of large differences among FOMC members, it is also assessed that it is difficult to predict whether and to what extent rates will be cut next year.

◆ New York markets cheer 'surprise dove' Powell… end higher

The three major U.S. stock indices closed higher. The FOMC implemented a 25bp rate cut, and markets cheered as Jerome Powell, chair of the U.S. central bank (Fed), struck a more dovish tone than expected. On the 10th (U.S. Eastern time) near the close at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 48,057.75, up 497.46 points (1.05%) from the previous session. The S&P 500 rose 46.17 points (0.67%) to 6,886.68, and the Nasdaq Composite finished up 77.67 points (0.33%) at 23,654.16. Following Powell's remark at the post-FOMC press conference that rate hikes next year are off the table, U.S. stocks entered a rally mode, with the Dow rebounding more than 1%. Among the seven major tech stocks, most rose except Nvidia and Microsoft. Semiconductor stocks saw Nvidia fall 0.65%, but most other semiconductor stocks rallied, and the semiconductor index rose 1.29% to close.

◆ Kim Keon-hee summoned for her ninth special prosecutor questioning today… Remaining allegations including Jongmyo tea gathering to be investigated together

Kim Keon-hee, against whom a 15-year prison term was sought and who is awaiting sentencing on charges including involvement in manipulation of Deutsche Motors' stock, will be re-summoned by the Min Joong-gi special prosecutor team on the 11th. According to legal sources, Ms. Kim is scheduled to appear at 10:00 a.m. at the special prosecutor's office set up in the KT Gwanghwamun Building West in Jongno-gu, Seoul, for questioning. This will be her ninth appearance before the special prosecutor team and her third since she was formally indicted and detained on August 29. As the special prosecutor team is scheduled to conclude its investigation on the 28th, this may be the final in-person interrogation of Ms. Kim. At a briefing on the 4th, the special prosecutor team said, "At this point, we are planning to investigate the remaining matters at the summons on the 11th and finish up." The matters to be investigated that day include allegations of the private use of presidential office resources such as the 'Jongmyo tea gathering' and a 'naval onboard party.' In addition, the special prosecutor team plans to probe other outstanding allegations, including preferential treatment related to the presidential residence move, that have not yet been fully resolved.

◆ National Assembly to table 'expanded disclosure of lower-court judgments' at today's plenary… People Power Party filibuster planned

The National Assembly will hold a plenary session on the 11th and table amendments to the Criminal Procedure Act, the Banking Act, and the Act on the Performance of Police Duties. The Criminal Procedure Act amendment includes provisions to expand disclosure of lower-court judgments, and the Banking Act amendment includes provisions to prevent additional interest rates from reflecting insurance premiums and contributions. The Act on the Performance of Police Duties includes provisions allowing police officers to warn and, in urgent cases, restrain individuals entering restricted areas to distribute leaflets or similar material that could raise military or diplomatic tensions in border areas. This bill is linked to the Aviation Safety Act amendment (processed by the Assembly on the 2nd), which the People Power Party calls the 'revival of the law banning the distribution of leaflets to North Korea.' The Democratic Party plans to process these bills, but the People Power Party intends to filibuster in opposition to the ruling party's judicial reform bills. A filibuster can be ended by a vote of at least three-fifths of all members after 24 hours from its start.

◆ Railway union suspends strike… KTX and other trains operating normally

Korea Railroad Corporation (KORAIL) said on the 11th that all trains will operate normally as the Korea Railroad Workers' Union has suspended its strike. Railway labor and management reportedly reached a tentative agreement late the previous night on key issues including the normalization of performance bonuses. A union official said, "To minimize public inconvenience, we decided to suspend the strike and engage in intensive negotiations," adding, "We are conducting negotiations to narrow the contentious items in the detailed wage negotiation agenda." The biggest issue in these talks is the normalization of performance bonuses; the union's top priority is to normalize the current situation in which performance bonus payment is based on only 80% of base pay. The union had planned to strike from 9 a.m. that day if negotiations broke down. With this tentative agreement, a strike and transport chaos have been averted.

◆ Trump: "Tanker seized off Venezuela's coast… largest ever"

U.S. President Donald Trump said on the 10th (local time) that a large tanker was seized off the coast of Venezuela. Speaking at a roundtable event at the White House, Trump said, "As you may know, we just seized a tanker off the coast of Venezuela." He did not comment on the background of the seizure. The U.S. seizure of a tanker came amid rising tensions after the Trump administration declared war on Venezuelan drug cartels and deployed assets including the Gerald R. Ford carrier strike group to the Caribbean near the country, raising the risk of military confrontation between the two countries. Earlier, two U.S. Navy fighter jets flew over the southern Caribbean off Venezuela on the 8th. Analysts say the Trump administration's show of force is aimed not only at drug cartels but also at attempting to oust the Nicolás Maduro regime.

◆ Rain and snow in many areas… Heavy snow advisory for Gangwon highlands

On Thursday the 11th, cloudy skies will bring rain or snow to many parts of the country. According to the Korea Meteorological Administration, rain is expected across most regions from dawn to morning, and rain or snow will fall in eastern Gyeonggi, Gangwon, and the northeastern highlands of North Gyeongsang. From the afternoon through the morning of the 12th, rain or snow will continue along Gangwon's East Coast and highlands and the East Coast and northeastern highlands of North Gyeongsang. Expected precipitation amounts are 5–10 mm for Seoul, Incheon, Gyeonggi and the five western islands; 5–15 mm for Gangwon's East Coast; 5–10 mm for Gangwon inland and highlands; around 5–10 mm for Daejeon, Sejong, South Chungcheong and North Chungcheong; 5–10 mm for Gwangju and South Jeolla; and around 5 mm for North Jeolla. Expected snowfall amounts are 3–8 cm (locally over 10 cm) for Gangwon highlands and East Coast, and 1–5 cm for the northeastern highlands of North Gyeongsang. Morning low temperatures are expected to be -1 to 9°C, and daytime highs 6 to 17°C. Fine dust levels are expected to be 'normal' nationwide.

Cha Eun-ji, Hankyung.com reporter chachacha@hankyung.com