[Good Morning Stock Market] US Expected Inflation Declines... "KOSPI Rebound Anticipated"

New York Fed Expected Inflation at 3%
International Oil Prices Plunge About 5%
Focus on Samsung Electronics' Preliminary Earnings Announcement

Securities company app, stock trading scene. Photo by Hyunmin Kim kimhyun81@

On the 9th, the Korean stock market is expected to rebound, supported by the strong performance of the U.S. stock market due to the decline in expected inflation reported by the New York Federal Reserve Bank and the sharp drop in oil prices. The preliminary earnings announcement of Samsung Electronics, scheduled for the day, is also expected to influence the market direction.

On the 8th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 37,683.01, up 216.90 points (0.58%) from the previous session. The Standard & Poor's (S&P) 500 index rose 66.30 points (1.41%) to 4,763.54, and the Nasdaq index increased by 319.70 points (2.20%) to close at 14,843.77.

The main reason for the strong close of the U.S. stock market was the decline in both short- and long-term expected inflation. The New York Fed announced that the one-year expected inflation rate fell to 3% in December last year, down 0.4 percentage points from the previous month (3.4%). This is the lowest level in about three years since January 2021. Expected inflation is a key indicator used in the Federal Reserve's interest rate policy decisions. With both short- and long-term expected inflation declining, expectations that inflation will continue to ease are likely to gain momentum.

The sharp drop in international oil prices also had an impact. Saudi Arabia, the world's largest oil exporter, lowered the price of Arab Light Crude oil exported to Asian countries by $2 per barrel. As a result, the U.S. benchmark West Texas Intermediate (WTI) crude oil for February delivery closed at $70.17 per barrel on the previous day (local time), a plunge of 4.93% ($3.67) compared to the previous trading day.

The Korean stock market is also expected to start higher, influenced by the strong close of the U.S. market due to the decline in short- and long-term expected inflation. From a sector perspective, buying interest in artificial intelligence (AI) and semiconductor-related stocks is a key point to watch. With CES 2024, the world's largest electronics and IT exhibition, underway, Nvidia (+6.4%) hit a new high following the unveiling of its home-use AI chip. Alongside this, AI-related stocks such as AMD (+5.4%) and Micron (+1.8%) also showed strong gains.

Samsung Electronics' preliminary earnings announcement is also expected to affect the direction of the domestic stock market. In the U.S., the earnings season has started, led by financial stocks such as JP Morgan. The Korean stock market will enter the earnings season starting with Samsung Electronics.

Han Ji-young, a researcher at Kiwoom Securities, analyzed, "After earnings announcements, changes in profit forecasts reflected through securities analysts' reviews and previews, and whether the overall market valuation is reasonable based on fundamentals, will be a turning point."