[Good Morning Stock Market] US Stocks Close Higher on Falling Treasury Yields... KOSPI Expected to Start Upward

Overnight, the U.S. stock market closed higher, supported by a decline in Treasury yields. On the 12th, 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 33,804.87, up 65.57 points (0.19%) from the previous session. The Standard & Poor's (S&P) 500 index rose 18.71 points (0.43%) to 4,376.95, and the Nasdaq index ended trading at 13,659.68, up 96.83 points (0.71%). All three major indices have risen for four consecutive trading days. This is attributed to the decline in long-term Treasury yields following news that the producer price inflation rate weakened compared to the previous month.

The U.S. Department of Labor announced that the September Producer Price Index (PPI), seasonally adjusted, rose 0.5% from the previous month. Although this is a slowdown from August's 0.7%, it exceeded market expectations of 0.3%. The September core PPI, excluding food, energy, and trade, increased by 0.2% month-over-month, maintaining the same level as in August.

Treasury yields showed a decline mainly in long-term bonds. The 10-year Treasury yield fell more than 10 basis points (1bp = 0.01 percentage points) from the previous day to 4.56%, and the 30-year Treasury yield traded around 4.70%, down about 13 basis points.

The market is focusing on the Consumer Price Index (CPI) to be released that day, as the inflation rate will significantly influence the Federal Reserve's (Fed) decision on further interest rate hikes. According to the minutes of the September Federal Open Market Committee (FOMC) meeting released by the Fed that day, "a majority of participants judged that one more rate hike would be appropriate at a future meeting, while some judged that no additional hikes would be necessary." However, all participants agreed that restrictive policies should be maintained for some time until there is confidence that inflation is consistently declining toward the target.

The KOSPI is expected to start with a rise of around 0.2% to 0.5%. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "With growing expectations for an earnings turnaround, it is important to watch whether the earnings waterfall effect of the leading companies will appear." However, he added, "Although profits have improved, sales growth remains slow, and foreign investors' inflows are concentrated in futures and arbitrage trading, which could increase uncertainty in the stock market." He further noted, "Today, the domestic stock market is expected to show cautious sentiment ahead of the September U.S. Consumer Price Index release, along with fatigue from the previous day's gains."