[Good Morning Stock Market] 'Inflation and Middle East Unrest' US Stock Market Mixed... KOSPI Expected to Start Lower

On the 27th, the US stock market showed mixed trends reflecting inflation indicators and geopolitical instability in the Middle East. The KOSPI is expected to open lower on the 30th.

On the 27th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,417.59, down 366.71 points (1.12%) from the previous session. The Standard & Poor's (S&P) 500 index closed at 4,117.37, down 19.86 points (0.48%), while the Nasdaq index closed at 12,643.01, up 47.41 points (0.38%). The Nasdaq index rebounded after two consecutive days of decline, boosted by strong third-quarter earnings from Amazon. The S&P 500 index has fallen more than 10% from its late July peak, entering what analysts describe as a technical correction phase.

As major companies continue to release their third-quarter earnings, the Personal Consumption Expenditures (PCE) price index, known as the Federal Reserve's (Fed) preferred inflation gauge, rose. The core PCE price index for September increased by 0.3% month-over-month and 3.7% year-over-year. This matched market expectations and represented the lowest figure since May 2021. Although the inflation level remains above the Fed's target of 2%, inflationary pressures appear to be easing.

Nevertheless, concerns about the short-term inflation trajectory leave the possibility of continued Fed tightening policies. In fact, expected inflation has risen further. The University of Michigan reported that the one-year expected inflation in the US rose to 4.2% this month, significantly exceeding the forecast of 3.8%, marking the highest level since May. The five-year long-term expected inflation also increased to 3.0% from 2.8% the previous month.

Personal consumption expenditures in September rose 0.7% compared to the previous month, surpassing market expectations of 0.5%. This indicates that US consumer spending remains robust.

On this day, the domestic stock market is expected to open down about 0.5% to 0.8% in early trading. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "In the early part of this week, the domestic stock market is expected to be cautious due to the US FOMC meeting, South Korea's September exports, the US ISM manufacturing index, employment reports, and developments in Middle East geopolitical issues," adding, "It is necessary to pay attention to risk management."