[Good Morning Stock Market] KOSPI Expected to Show Slight Gains Amid Inflation Easing Expectations

US CPI Meets Expectations, New York Stock Market Strengthens
Trend Expected to Continue Focused on Specific Stocks Rather Than Indices

On the 14th, the domestic stock market is expected to start in a slightly positive range. The easing of inflation concerns, as the Consumer Price Index (CPI) recorded 4.0% year-on-year, is likely to have a positive impact following the rise in the U.S. stock market.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,212.12, up 145.79 points (0.43%) from the previous trading day. The Standard & Poor's (S&P) 500 index closed at 4,369.01, up 30.08 points (0.69%). The tech-heavy Nasdaq index ended the day at 13,573.32, up 111.40 points (0.83%).

[Image source=Yonhap News]

The S&P 500 and Nasdaq indices reached their highest levels in 13 months since April last year. The May CPI, released before the market opened that day, showed a 4% increase year-on-year, significantly slowing down from the 4.9% rise in April. Amid this, expectations are growing that the Federal Reserve (Fed) will keep interest rates unchanged in June. According to the Chicago Mercantile Exchange (CME) FedWatch, the probability of the Fed maintaining the current rate is about 91%.

Seosangyoung, a researcher at Mirae Asset Securities, said, "The rise in the New York stock market is positive for the domestic market," but added, "The fact that core inflation remains at a high level offsets the positive factors, so the market will likely show limited fluctuations."

Researcher Seo also noted, "The reduction in gains during the U.S. trading session due to increased profit-taking pressure is a burden on the domestic market," adding, "Although the U.S. market showed strength, most stocks slowed down except for some that experienced FOMO (Fear Of Missing Out), which is also a burden."

The domestic stock market is expected to show a firm performance supported by foreign demand amid a stronger Korean won after starting in a slightly positive range. However, it is anticipated that the process of absorbing volume will continue, leading to a flow limited more to individual stocks than the overall index.

Han Jiyoung, a researcher at Kiwoom Securities, said, "Despite the coexistence of expectations for the U.S. CPI and caution ahead of the Federal Open Market Committee (FOMC), the domestic market closed higher thanks to the strength in semiconductor and secondary battery stocks and expectations for China's economic stimulus."

She added, "Today as well, positive macro conditions such as the U.S. May CPI results and the won-dollar exchange rate entering the 1,260 won range offshore, along with the strength of U.S. electric vehicle and artificial intelligence (AI) growth stocks like Tesla (3.6%) and Nvidia (3.9%), are expected to lead to a positive start."

However, she cautioned that the recent high synchronization between the domestic and U.S. stock markets, combined with CNN's Fear and Greed Index reaching 80 points?the highest since February 1?should be noted. This short-term overheating concern, coupled with caution ahead of the June FOMC, may limit the intraday upward momentum of the domestic stock market, so preparation is necessary.