[Good Morning Stock Market] US Market Takes a Breather... KOSPI Expected to Show Volatile Trading

On the 16th (local time), the US stock market closed lower as profit-taking selling poured in. While the Federal Reserve (Fed) kept the benchmark interest rate unchanged, attention is focused on Chairman Jerome Powell's congressional speeches on the 21st and 22nd. The domestic stock market is expected to experience volatility influenced by factors such as the exchange rate.

On the 16th at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,299.12, down 108.94 points (0.32%) from the previous session. The Standard & Poor's (S&P) 500 index fell 16.25 points (0.37%) to 4,409.59, and the Nasdaq index dropped 93.25 points (0.68%) to 13,689.57.

The S&P 500 and Nasdaq indices rose 2.6% and 3.3%, respectively, last week, marking their largest weekly gains since March. Along with the recent uptrend and the Federal Open Market Committee (FOMC) decision to hold rates steady, investors appear to be taking profits and pausing. On the 19th, the US financial markets will be closed in observance of Juneteenth Day, commemorating the emancipation of slaves.

Jerome Powell, Chairman of the U.S. Federal Reserve
[Photo by Yonhap News]

The Fed has left room for additional rate hikes in the second half of the year. The Fed officials' final rate forecast is 5.60%, which is 0.50 percentage points higher than the current level. However, market expectations for a hold at the current level are emerging depending on inflation indicators. Meanwhile, Chairman Powell is scheduled to appear before the House Financial Services Committee on the 21st and the Senate Banking Committee on the 22nd, drawing attention to what he will say regarding monetary policy in Congress.

On the 16th, the KOSPI closed at 2,625.79, and Kiwoom Securities projected a weekly KOSPI range of 2,570 to 2,670 points for this week. Amid the aftereffects of the June FOMC meeting, which left room for further hikes, volatility is expected for the time being, influenced by remarks from Chairman Powell and other key Fed officials, as well as the won-dollar exchange rate.

Han Ji-young, a researcher at Kiwoom Securities, said, "Additional key events to watch this week include South Korea's June exports, the manufacturing and services Purchasing Managers' Index (PMI) for the US and Eurozone, and FedEx's earnings, all of which relate to fundamentals. In particular, the earnings and guidance changes of FedEx, a major US logistics company that serves as a barometer of the global economy, could affect not only that country but also the price direction of domestic cyclical and semiconductor sectors, which have recently shown a rebound in stock prices."