[Good Morning Stock Market] Oil Price Rise Fuels Inflation Concerns... KOSPI Expected to Start Lower

[Image source=Yonhap News]

On the 20th, the KOSPI is expected to start lower due to concerns that rising international oil prices are increasing inflationary pressures.

On the 19th (Eastern Time), the Dow Jones Industrial Average closed at 34,517.73, down 106.57 points (0.31%) from the previous session at the New York Stock Exchange (NYSE). The Standard & Poor's (S&P) 500 index fell 9.58 points (0.22%) to 4,443.95, and the Nasdaq index dropped 32.05 points (0.23%) to 13,678.19.

The New York stock market opened lower amid concerns about accelerating inflation after Canada's August Consumer Price Index was announced to have risen 4.0% year-over-year. In particular, the Canadian 10-year government bond yield hit its highest level since 2008, influencing the rise in U.S. Treasury yields as well.

However, the decline halted in the latter part of the session as investors awaited the U.S. Federal Open Market Committee (FOMC) meeting. Additionally, international oil prices turned downward in the afternoon, significantly reducing their losses.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 1.06%, and the MSCI Emerging Markets Index ETF dropped 0.59%. Eurex KOSPI 200 futures declined 0.09%. Considering this, the KOSPI is expected to open down around 0.3% on the day.

Seosangyoung, a researcher at Mirae Asset Securities, analyzed, “The U.S. stock market's decline due to rising Treasury yields ahead of the FOMC, reflecting inflation concerns, is a burden on the domestic market. Especially, the rise in international oil prices fueling inflation raises worries that the Federal Reserve may revise its 2024 interest rate outlook upward, intensifying market anxiety.”

He added, “Furthermore, the Philadelphia Semiconductor Index fell 0.96%, and the significant decline in China's electric vehicle sector also weighed on related stocks. Of course, the stabilization of international oil prices in the latter part of the session and the decline in the offshore won-dollar exchange rate, raising expectations for a stronger Korean won, are favorable factors.”

Kiwoom Securities also forecasted that the KOSPI would show limited price movement due to concerns over the U.S. 10-year Treasury yield breaking previous highs and the cautious sentiment ahead of the September FOMC.

Han Ji-young, a researcher at Kiwoom Securities, predicted, “Although no clear leading sectors are visible and the index may remain range-bound, a rotation among major thematic stocks such as nuclear power, satellite communications, robotics, and obesity treatments is expected. Externally, the FOMC and domestically, resolving short-term supply-demand instability in leading sectors like semiconductors and secondary batteries are important. From a technical perspective, whether the 120-day moving average support holds will also be a key focus for the market today.”

Meanwhile, the 1-month Non-Deliverable Forward (NDF) won-dollar exchange rate stood at 1,326.45 won, suggesting the won-dollar rate is expected to open about 3 won lower.