[Good Morning Stock Market] US FOMC Approaching, Market Holds Breath... KOSPI Expected to Start Slightly Higher

Overnight, the U.S. stock market closed flat as investors remained cautious ahead of the September Federal Open Market Committee (FOMC) regular meeting. On the 19th, the KOSPI is expected to start slightly higher.

On the previous day (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,624.30, up 6.06 points (0.02%) from the previous session. The Standard & Poor's (S&P) 500 index rose 3.21 points (0.07%) to 4,453.53, and the Nasdaq index ended at 13,710.24, up 1.90 points (0.01%). With the FOMC rate decision and Federal Reserve (Fed) Chair Jerome Powell's press conference scheduled for the 20th, market movements were limited.

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

Market experts expect the Fed to keep the benchmark interest rate unchanged at this meeting. The key issue is whether there will be additional rate hikes within the year. Recently, inflationary pressures, including high oil prices, have increased, raising expectations that the Fed may implement one more rate hike this year. The Fed is also expected to release a dot plot showing members' rate projections at this meeting. This will provide insight into the possibility of further rate hikes this year and the extent of rate cuts next year.

Looking at major stocks, Tesla fell 3.32% due to downward revisions in corporate earnings estimates following additional price cuts. Apple closed up 1.69%, buoyed by strong pre-orders for the iPhone 15, contrary to market concerns. Apple component stocks, such as Analog Devices (0.89%), also rose alongside.

Meanwhile, the price of West Texas Intermediate (WTI) crude oil surpassed $91 per barrel, reaching its highest level since November last year. The continuation of high oil prices is expected to negatively impact the stock market due to increased inflation concerns.

The KOSPI is expected to start up around 0.3% today. Seo Sang-young, Head of Media Content at Mirae Asset Securities, said, "Ahead of the FOMC, the Korean stock market is expected to fluctuate within a narrow range without a clear direction," adding, "After starting with a rise of about 0.3%, a differentiated market centered on related stocks is expected to proceed." He continued, "Although the Philadelphia Semiconductor Index, which plunged more than 3% last Friday, only rose 0.46%, the rebound is noteworthy," and added, "Recently, TSMC's comments on demand slowdown have raised concerns about the semiconductor industry, but today, Deutsche Bank upgraded its investment rating and target price for Micron, citing the end of the semiconductor industry downcycle, which is expected to have a positive impact on related stocks."