[Market ING] KOSPI, Will It Cross 2900 Amid US Inflation Index?

KOSPI Expected Band 2770~2890 Range

This week (July 8-12), the stock market is expected to focus on whether the KOSPI, which has risen to the 2860 level, can break through the 2900 mark. The market anticipates that if the upcoming U.S. June Consumer Price Index (CPI) results are favorable, the KOSPI could reach the 2900 level.

[Image source=Yonhap News]

Last week, the KOSPI rose by 2.3%, and the KOSDAQ increased by 0.84%. Except for one day, the KOSPI showed an upward trend throughout the week. Notably, it rose for three consecutive days in the latter part of the week, hitting new highs for two consecutive days and reaching the 2860 level. Jinhyuk Kang, a researcher at Shinhan Investment Corp., explained, "With bond yields stabilizing, risk asset preference recovered, leading Nvidia to rebound after a pause, and Tesla continued its upward trend due to strong Q2 vehicle deliveries, creating a favorable environment for major domestic semiconductor and secondary battery stocks." He added, "The KOSPI has been rising for five consecutive weeks, and the KOSDAQ successfully reversed to an upward trend after three weeks."

Jaewoon Cho, a researcher at Daishin Securities, said, "Recently, despite fluctuations in bond yields and the high level of the won-dollar exchange rate, the KOSPI's upward momentum has expanded, surpassing the year's high and seeking to settle around the 2860 level." He analyzed, "While there were positive changes in external variables, internal drivers such as strong Korean exports, Samsung Electronics' stock price leveling up, and renewed expectations for value increase contributed."

This week, market attention is expected to focus on the U.S. June CPI scheduled for release on the 11th. If the CPI results are favorable, it is expected to support further gains in the KOSPI. Researcher Cho stated, "If last week's Samsung Electronics earnings surprise set the KOSPI level in the mid-2800s, this week the U.S. June CPI results will determine the KOSPI level." According to Bloomberg consensus (average of securities firms' forecasts), the June CPI is expected to be 3.1%, down 0.2 percentage points from May's 3.3%. Cho explained, "The headline CPI has confirmed a slowdown for three consecutive months, sustaining expectations for interest rate cuts. The key is the core CPI, with Bloomberg consensus at 3.4% and the Cleveland Federal Reserve Bank forecast at 3.52%, indicating a high possibility of stagnation or rebound compared to May's 3.4%." He added, "The strength of interest rate cut expectations and whether the KOSPI breaks through the 2900 level will be determined by the core CPI results."

With the start of the Q2 earnings season, expectations for earnings are also likely to have a positive impact on stock prices. Younghwan Kim, a researcher at NH Investment & Securities, said, "If the U.S. June CPI announcement is well digested, the stock market's response to the Q2 earnings season is likely to be positive." He recommended expanding stock holdings centered on sectors with improved earnings forecasts. NH Investment & Securities projected the KOSPI range for this week to be between 2770 and 2890.

Key schedules for this week include the release of China's June CPI on the 10th, the Bank of Korea's Monetary Policy Committee regular meeting and the U.S. June CPI announcement on the 11th. Following that, the U.S. June Producer Price Index (PPI) and the University of Michigan Consumer Sentiment Index for July will be released on the 12th.