[Good Morning Stock Market] European Markets Rise Amid US Holiday... "KOSPI Expected to Start Higher"

European Stocks Rise Amid Interest Rate Cut Expectations
KOSPI Continues Foreign Buying Momentum
Capital Inflow Focused on 'Value-Up' Beneficiary Sectors

On the 28th, the KOSPI is expected to start with a 0.2~0.4% rise.

[Image source=Reuters Yonhap News]

On the 27th (local time), while the US stock market was closed for Memorial Day, European stock markets mostly rose. Germany's DAX30 index closed at 18,774.71, up 0.44% (81.34 points). France's Paris CAC40 index ended the session at 8,132.49, up 0.46% (37.52 points) from the previous close. The UK stock market was closed due to the Bank Holiday.

The market is focusing on the European Central Bank (ECB)'s benchmark interest rate movements. At the ECB monetary policy meeting on June 6, a rate cut is almost certain. Philip Lane, the ECB Chief Economist, supported the June rate cut, stating, "Except for unexpected events, we believe it is sufficient at this point to remove the highest level of restriction."

The variable for the rate cut remains inflation. The Eurozone's inflation rate fell to 2.4% in April, the lowest in three years. As inflation pressure eases, an environment suitable for a rate cut is being created. European stock markets are awaiting Germany's May Consumer Price Index (CPI) on the 29th and the Eurozone CPI on the 31st. The US April Personal Consumption Expenditures (PCE) price index will also be announced on the 31st. If inflation slowdown is confirmed again in the announcements on the 31st, expectations for a rate cut are likely to increase. Meanwhile, on the 28th, the US stock market will shorten the stock settlement period from the existing 'T+2 days' to 'T+1 day.' Now, payments are settled the day after the stock transaction.

The previous day, the KOSPI closed at 2,722.99, up 1.32%. Samsung Electronics reversed its intraday decline of over 2% in the afternoon as foreign investors entered with low-price buying, and the KOSPI also synchronized, expanding its gains.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Foreign investors have recorded a net purchase of about 23.5 trillion KRW in the domestic stock market this year, of which 11.9 trillion KRW is in semiconductors and the remaining 11.56 trillion KRW is in other sectors." He added, "Outside of semiconductors, foreign investors have heavily net purchased sectors expected to benefit from the government's 'Value-Up Program' proposed at the beginning of the year, such as automobiles, trading companies & capital goods, machinery, banks, and insurance." Except for trading companies & capital goods, all other sectors have recently seen upward revisions in earnings estimates. Additionally, Kim said, "Today, the KOSPI is expected to start with a 0.2~0.4% rise."