[Good Morning Stock Market] US Stock Market Rally... KOSPI Expected to See Bargain Buying

[Image source=Yonhap News]

As the U.S. stock market once again reached an all-time high, expectations are rising that bargain hunting will flow into the domestic stock market on the 11th. Despite lingering uncertainties ahead of the U.S. Federal Open Market Committee (FOMC) meeting on the 12th (local time), it is anticipated that there will be some degree of rebound following the significant decline the previous day.

All three major indices of the New York stock market closed higher on the 10th (local time). With the upcoming FOMC regular meeting and the release of the May Consumer Price Index (CPI) this week, technology stocks rose, showing a moderate upward trend.

On this day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 38,868.04, up 0.18% from the previous trading day. The large-cap-focused S&P 500 index rose 0.26% to 5,360.79, and the technology-heavy Nasdaq index jumped 0.35% to 17,192.53, marking an all-time high.

By individual stocks, Nvidia rose 0.75% on its first trading day after a 10-for-1 stock split. Meta, the parent company of Facebook, climbed 1.96%. Microsoft (MS) and Alphabet, the parent company of Google, increased by 0.95% and 0.5%, respectively. On the other hand, Apple, which introduced a new artificial intelligence (AI) service that day, fell 1.91%.

Investors are focusing on the fourth FOMC regular meeting of the year, held on the 11th and 12th. Earlier, the European Central Bank (ECB) initiated a pivot by lowering interest rates by 0.25 percentage points on the 6th, but the U.S. Federal Reserve (Fed) is likely to keep the benchmark interest rate unchanged for the seventh consecutive time at 5.25?5.5% immediately after the FOMC meeting on the 12th. The May CPI will also be announced on the 12th. Last month’s CPI and core CPI are expected to have risen by 3.4% and 3.5% year-over-year, respectively. The May CPI inflation rate is expected to be the same as the previous month, while the core CPI inflation rate is forecasted to have decreased by 0.1 percentage points compared to the previous month.

In the domestic stock market, where the 2,700 level was breached intraday the previous day, bargain hunting is expected to flow in.

The KOSPI closed at 2,701.17, down 0.79% from the previous session due to institutional fund outflows. The strong U.S. May employment report dampened expectations for interest rate cuts, acting as downward pressure. Except for some individual stocks such as heatwave-related stocks, Yanolja’s U.S. listing, and defense industry stocks, most stocks declined. The KOSDAQ index also closed down 0.17% at 864.71.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The U.S. stock market saw steady buying throughout the day, with the S&P 500 and Nasdaq indices hitting all-time highs again after three trading days," adding, "In the Korean stock market, a rebound buying influx and some theme-based rotation are expected."