[Good Morning Stock Market] US Interest Rate Cut Expectations Retreat... KOSPI Expected to Start Lower

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On the 24th, the KOSPI is expected to start lower as expectations for a U.S. interest rate cut retreat.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 39,065.26, down 605.78 points (1.53%) from the previous session. The S&P 500 fell 39.17 points (0.74%) to 5,267.84, and the Nasdaq dropped 65.51 points (0.39%) to 16,736.03.

Despite Nvidia posting strong first-quarter earnings and surging 9.3%, the New York market closed lower as strong employment and manufacturing data diminished expectations for an interest rate cut.

The U.S. weekly initial jobless claims came in at 215,000, below both the previous week’s 223,000 and the consensus of 220,000. Meanwhile, continuing claims rose to 1,794,000 from 1,786,000 the previous week, matching the consensus of 1,794,000.

Additionally, the May S&P Global U.S. Manufacturing Purchasing Managers’ Index (PMI) was 50.9, exceeding both the prior month’s 50.0 and the consensus of 50.0. The global manufacturing PMI also rose to 54.4, above the previous 51.3 and consensus of 51.1, indicating a favorable economic trend centered on the U.S. and other major countries.

The Morgan Stanley Capital International (MSCI) Korea Index Exchange-Traded Fund (ETF) fell 1.0%, and the MSCI Emerging Markets Index ETF dropped 0.7%. Eurex KOSPI 200 futures declined 1.4%. Considering this, the KOSPI is expected to open down by approximately 0.7% to 1.2%.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, “The domestic stock market will be influenced by broad profit-taking in the New York market. Although government-led semiconductor industry support is expected to sustain optimistic investment sentiment in the semiconductor sector, which has a large market capitalization, there will likely be significant profit-taking from recent record highs.”

Han Ji-young, a researcher at Kiwoom Securities, stated, “In the absence of new catalysts, restrictive macro conditions such as market interest rates around 4.4% and exchange rates near 1,360 won will limit the upside. Although Nvidia’s after-hours strength led to expectations that the KOSPI would attempt to break previous highs, selling pressure mainly from institutional investors suggests that, similar to the New York market, profit-taking due to valuation concerns is more likely than further index gains.”

She added, “Since continuous market gains have become difficult, attention should be paid to the movements of large-cap stocks such as semiconductors and automobiles. Additionally, interest in energy sectors including solar power, hydrogen, and nuclear power is expected to rise due to increased demand for artificial intelligence (AI), power supply issues, and benefits from U.S.-China tariff impositions.”