[Good Morning Stock Market] "US Stocks with Lower Rate Cut Expectations... KOSPI Starts Slightly Lower"

The U.S. stock market showed weakness amid concerns that the Federal Reserve's (Fed) rate cut timing will be delayed. The Korean stock market is also expected to start slightly lower on the 19th.

On the 16th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell 0.37% from the previous trading day to 38,627.99. The S&P 500 dropped 0.48% to 5,005.57, and the Nasdaq closed down 0.82% at 15,775.65. These three major indices had shown gains for five consecutive weeks but declined this week for the first time in six weeks.

The cause of the decline is attributed to the Producer Price Index (PPI) exceeding expectations. According to the U.S. Department of Labor, the January PPI rose 0.3% month-over-month on a seasonally adjusted basis. This surpassed market forecasts, raising concerns that the Fed's rate cut timing will be delayed.

In particular, Fed officials continued to make hawkish (favoring monetary tightening) remarks, increasing uncertainty. Mary Daly, President of the Federal Reserve Bank of San Francisco, said regarding rate cuts, "There is a need to resist the temptation to act quickly when patience is required," and added, "We must be prepared to respond nimbly depending on how the economy unfolds."

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) rose 0.6%, and the Emerging Markets Index ETF increased by 0.5%. By sector, interest is expected to continue in semiconductors and low price-to-book ratio (PBR) stocks.

Researcher Kim Seok-hwan explained, "Since the beginning of this month, net foreign purchases have exceeded approximately 6 trillion won, driving the stock market upward," and added, "The benefits from semiconductors and government policies (value-up program) are likely to continue for some time." He further noted, "Externally, market attention will focus on the movement of the Chinese stock market after the Lunar New Year holiday and Nvidia's earnings scheduled for midweek."

Han Ji-young, a researcher at Kiwoom Securities, also said, "Although the dominance of low PBR stocks has weakened compared to early February, it is worth considering that stocks generally regarded as top picks in low PBR sectors such as banks, securities, and automobiles showed solid prices last week." She added, "This week, depending on additional news flow related to low PBR policies, rotation between low valuation and high valuation stocks is expected to occur frequently."