Expecting to Reach a New All-Time High... Will KOSPI Set a Record This Week?

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] This week, attention is focused on whether the KOSPI index will hit an all-time high. Amid high expectations from the market and investors, the May consumer price indices expected to be released later this week in China and the United States are likely to be variables.

According to the Korea Exchange on the 6th, the KOSPI rose for five consecutive days from the 28th of last month to the 3rd, reaching 3247.53 (closing price). This is only 1.77 points away from the all-time closing high of 3249.30 recorded on the 10th of last month. During trading hours, it soared to 3258.50, the second-highest level after the intraday all-time high of 3266.23 recorded on January 11 this year.

Although the KOSPI closed at 3240.08 on the 4th, down 0.23% from the previous day, it is considered to have held up well. This is because all three major U.S. indices, including the Dow Jones Industrial Average, fell the previous day, with the Standard & Poor's (S&P) 500 index and the Nasdaq index dropping 0.36% and 1.03%, respectively. The KOSPI fell below the 3220 level but recovered a significant portion of the losses in the afternoon, reducing the decline.

Following this steady movement, the New York stock market rose on the 4th (local time) as concerns over early tightening eased, raising expectations for a new record. The Dow rose 0.52%, and the S&P 500 increased by 0.88%. The Nasdaq, which is more affected by technology stocks and to which the KOSPI is relatively more sensitive, rose 1.47%, surpassing the previous day's losses. The rise in the three major indices was due to the May new employment figures being lower than expected, somewhat easing concerns about early tightening by the Federal Reserve (Fed).

This favorable U.S. stock market trend could act as a factor for the domestic stock market's rise. Jung Myung-ji, head of the Investment Information Team at Samsung Securities, said, "There was concern that tightening would accelerate if employment improved following inflation, but since May employment came out neither good nor bad, the possibility of saying 'the central bank will not rush tightening' has increased."

However, the May consumer price indices expected to be released later this week in China and the United States are likely to be variables. When the U.S. April Consumer Price Index (CPI) was announced on the 12th of last month (local time), it recorded the largest year-on-year increase in 13 years, causing the New York stock market to plunge around 2%. The KOSPI also fell 1.25% compared to the previous day.