[Good Morning Stock Market] US Stocks Rise Ahead of CPI Announcement... KOSPI Expected to Show Predominant Wait-and-See Sentiment

As expectations for a slowdown in inflation emerged ahead of the June Consumer Price Index (CPI) announcement, the U.S. stock market closed higher on the 11th (local time). The Dow Jones Industrial Average rose 317.02 points (0.93%) to close at 34,261.42, the large-cap S&P 500 index gained 29.73 points (0.67%) to finish at 4,439.26, and the tech-heavy Nasdaq index ended the day up 75.22 points (0.55%) at 13,760.70.

Image source=AP·Yonhap News

Energy-related stocks rose more than 2%, buoyed by the increase in international oil prices, while utilities, financials, real estate, and telecommunications sectors also recorded gains of over 1%. Notably, Amazon rose more than 1% as its annual largest discount event, Prime Day, began. Microsoft gained about 0.2% following news of additional layoffs and the U.S. court's dismissal of the Federal Trade Commission (FTC)'s request for a preliminary injunction to block the acquisition of Activision Blizzard. Activision Blizzard's stock price surged more than 10%.

Investors focused on the June CPI to be released the next day. The market expects the June CPI to rise 0.3% month-over-month and 3.1% year-over-year, continuing the trend of slowing inflation. With expectations that the U.S. Federal Reserve (Fed) will raise the benchmark interest rate at this month's Federal Open Market Committee (FOMC) meeting, the June CPI is seen as a key indicator for future policy direction.

Following the rate hike in July, a rate hold in September is widely anticipated. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market reflected about a 93% probability of a 0.25 percentage point rate increase (a "baby step") in July as of that afternoon. The probability of a rate hold in September stood in the 70% range.

The domestic stock market is expected to open higher on the 12th. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The domestic market is likely to take a breather following the sharp rise the previous day. Ahead of the U.S. June CPI announcement, a cautious sentiment is expected to prevail, but as the credit market is rapidly stabilizing, investor sentiment is anticipated to be favorable."

Han Ji-young, a researcher at Kiwoom Securities, commented, "The limited price movement is likely due to the wait-and-see attitude ahead of the U.S. June CPI and profit-taking from secondary battery stocks, which had been performing well even during recent market corrections. From a sector perspective, the 2% gain in West Texas Intermediate (WTI) crude oil, driven by production cut concerns from oil-producing countries and a decrease in U.S. gasoline inventories, is expected to improve short-term investor sentiment in domestic energy-related stocks such as refiners, providing trading opportunities."