[Good Morning Stock Market] Mixed Views on US Rate Cut Caution... "KOSPI Expected to Start Higher"

U.S. stocks closed mixed as Federal Reserve (Fed) Chair Jerome Powell showed caution regarding interest rate cuts.

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On the 3rd (local time) at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 39,127.14, down 43.1 points (0.11%) from the previous trading day. The large-cap-focused S&P 500 index ended the session at 5,211.49, up 5.68 points (0.11%). The tech-heavy Nasdaq index recorded 16,277.46, rising 37.01 points (0.23%).

At an economic policy forum held at Stanford University, Fed Chair Powell said, "It is too early to say whether recent inflation figures indicate more than a simple rise," adding, "It will take more time to assess inflation, and the timing of rate cuts is uncertain." Nevertheless, Powell added, "It seems appropriate to have rate cuts at some point this year."

In particular, positive economic indicators further lowered expectations for rate cuts. According to U.S. employment data firm Automatic Data Processing (ADP), private sector employment in the U.S. increased by 184,000 in March compared to the previous month, significantly exceeding experts' forecast of 155,000.

Along with this, the Institute for Supply Management (ISM) reported that the March services Purchasing Managers' Index (PMI) stood at 51.4, about 1.2% lower than the previous month's figure of 52.6. However, it remained above the baseline of 50.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell by 0.3%, while the MSCI Emerging Markets Index ETF rose by 0.1%. Eurex KOSPI 200 futures increased by 0.8%. Considering this, the KOSPI is expected to open down by 0.3% to 0.5% on the 4th.

Han Ji-young, a researcher at Kiwoom Securities, said, "Supported by stabilization in government bond yields and a Nasdaq rebound, the market is expected to attempt a rebound with the 2,700 level as the floor."

She particularly advised paying close attention to the semiconductor sector. The researcher stated, "The sharp drop in Intel's stock due to the widening losses in its foundry division is expected to have a positive impact on investor sentiment in the semiconductor sector," adding, "Intel acknowledged financial burdens in expanding production despite government subsidies through the CHIPs Act, and the reason for the increased losses is that the foundry has yet to gain superiority in technology and manufacturing costs." She continued, "Even if caution arises from the U.S. employment report later in the week, expectations for Samsung Electronics' preliminary earnings and high-bandwidth memory (HBM) guidance on the 5th remain valid, and the downside is expected to be protected."