[Good Morning Stock Market] US September Rate Cut Expectations Rise... "KOSPI Expected to Start Higher"

Core CPI Hits Lowest in 3 Years
US 3 Major Stock Markets All Close at Record Highs

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed)

On the 16th, the Korean stock market is expected to start higher. This is because the US Consumer Price Index (CPI) for April, announced the previous day, came in slightly below expectations (0.3%), increasing the likelihood of a Federal Reserve (Fed) interest rate cut in September. Fueled by this optimism, the US stock market closed at all-time highs.

On the 15th (local time), the Dow Jones Industrial Average closed at 39,908, up 349.89 points (0.88%) from the previous trading day. The S&P 500 ended at 5,308.15, up 61.47 points (1.17%). The Nasdaq closed at 16,742.39, up 231.21 points (1.4%). All three major indices set new record highs.

The US stock market cheered as last month's CPI inflation rate slowed and matched expert forecasts. The headline CPI rose 0.3% month-over-month and 3.4% year-over-year. These figures were below or in line with market expectations (0.4% and 3.4%, respectively) and both were lower than the previous month's results (0.4% and 3.5%, respectively). The core CPI increased 3.6% year-over-year. The core CPI excludes volatile energy and food prices to show the underlying trend of inflation, and is one of the inflation indicators the Fed watches most closely. The April core CPI was the lowest in three years since April 2021. It matched expert forecasts (3.6%) and was below the previous month's increase (3.8%).

The Korean stock market is also expected to benefit from this, with a growing preference for risk assets. Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "US inflation showed results that were neither too hot nor too cold, raising expectations for a Fed rate cut," and added, "The KOSPI is expected to start 0.8-1.2% higher." He further noted, "The risk asset preference is likely to expand, centered on large-cap stocks, especially semiconductors."