Mixed Trends Ahead of US Interest Rate Decision... KOSPI Recovers to 2400

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] The domestic stock market continued to show a firm tone on the afternoon of the 25th. With the US Federal Open Market Committee (FOMC) meeting scheduled for the 27th of this month, caution remains high, but expectations that tightening will be limited due to concerns over a recession caused by tightening have emerged. The KOSPI index recovered to the 2400 level as foreign and institutional investors expanded their joint buying, while the KOSDAQ index fluctuated within a narrow range.

As of 2:14 PM, the KOSPI index was at 2408.48, up 15.34 points (0.64%) from the previous session. Foreign investors net bought about 131.5 billion KRW, and institutions net bought about 138.8 billion KRW, driving the index up. Conversely, individual investors net sold about 264 billion KRW.

Most sectors, excluding insurance stocks, showed gains. The transportation equipment and textile sectors showed the largest increases, around 2%. Automakers that announced solid second-quarter earnings, such as Hyundai Motor up 2.6%, Kia up 1.85%, and Hyundai Mobis up 3.66%, saw concentrated buying from foreign investors and showed an upward trend.

LG Energy Solution also turned to gains in the afternoon, showing a strong rise of over 2%. Samsung Electronics and SK Hynix continued to show a firm tone. On the other hand, LG Chem, NAVER, and Samsung SDI continued to decline in the afternoon.

The market’s focus today was on the FOMC meeting scheduled for the 27th. While the prevailing prediction is that Jerome Powell, Chair of the US Federal Reserve (Fed), will again implement a 'giant step' (a 75 basis point rate hike), attention is on Powell’s remarks. KB Securities researcher Lee Eun-taek said, "(Chairman Powell) will likely say 'everything depends on inflation,' similar to last week when President Lagarde declared the end of forward guidance and said decisions will be made based on inflation," adding, "This could be positive in the short term."

The KOSDAQ index was also up 0.78 points (0.10%) at 790.53. While individual investors net bought about 84.3 billion KRW, foreign investors net sold about 83.2 billion KRW, resulting in a fierce battle within a narrow range. Institutions turned to net buying of about 5.8 billion KRW in the afternoon, lending support.

Kiwoom Securities researcher Han Ji-young said, "Even if a 75 basis point hike is implemented at the July FOMC, the stock market is expected to perceive it as neutral or as the disappearance of a factor." However, with earnings reports from major US big tech companies such as Microsoft on the 26th, Meta on the 27th, and Apple and Amazon on the 28th, volatility in the stock market may increase before and after the earnings announcements.