[Good Morning Stock Market] US Reaffirms 'Additional Rate Hike' Stance... KOSPI Expected to Start Slightly Lower

Overnight, the U.S. stock market closed lower as the Federal Reserve (Fed) reaffirmed its stance on further interest rate hikes. On the 6th, the domestic stock market is also expected to start slightly lower.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,288.64, down 129.83 points (0.38%) from the previous session. The Standard & Poor's (S&P) 500 index fell 8.77 points (0.20%) to 4,446.82, and the Nasdaq index dropped 25.12 points (0.18%) to 13,791.65.

Investors focused on the June Federal Open Market Committee (FOMC) minutes, which indicated officials' expectations of additional rate hikes within the year. According to the Fed, "almost all participants" mentioned that further increases in the federal funds rate this year would be appropriate. Although rates were held steady at the June FOMC meeting, attention was drawn to the fact that some participants supported a 0.25 percentage point hike, meaning the decision was not unanimous.

Jerome Powell, Chair of the U.S. Federal Reserve (Fed) [Image source=Yonhap News]

In the U.S. stock market, bank stocks generally underperformed, with Goldman Sachs falling over 2%. Semiconductor-related sectors were also weak due to news of China restricting exports of gallium and germanium, with Micron down 2.88% and Intel down 3.30%. On the other hand, Meta Platforms' stock rose about 2.9% ahead of the launch of its new social media platform 'Threads' on the 6th. Tesla and Alphabet A also gained over 1%.

The KOSPI is expected to start slightly lower on the day. This is due to increased concerns over a possible additional U.S. rate hike and renewed U.S.-China tensions, as the U.S. Department of Commerce strongly criticized China's export restrictions. However, the fact that the U.S. stock market only declined slightly is interpreted by some as evidence of resilient investor sentiment.

Seo Sang-young, head of the Media Content Division at Mirae Asset Securities, said, "Despite the hawkish Fed FOMC minutes and expanding U.S.-China conflicts, the U.S. stock market closed with only a slight decline, which is expected to have a positive impact on the Korean stock market," adding, "This still indicates strong investor sentiment." He also said, "The Korean stock market is expected to start slightly lower and then proceed with a process of digesting volume while preparing for the earnings season."