[Good Morning Stock Market] Growing Expectations for Interest Rate Cuts... "KOSPI Expected to Start Higher"

The Korean stock market is expected to start higher on the 29th. This is because the U.S. stock market collectively rebounded as expectations for a Federal Reserve (Fed) interest rate cut expanded.

On the 26th (local time), the Dow Jones Industrial Average closed at 40,589.34, up 654.27 points (1.64%) from the previous session in the New York stock market. The S&P 500 index closed at 5,459.10, up 59.88 points (1.11%), and the tech-heavy Nasdaq index closed at 17,357.88, up 176.16 points (1.03%).

The reason the U.S. stock market closed higher was that inflation indicators continued to ease. The U.S. personal consumption expenditures (PCE) for June rose 0.1% month-over-month and 2.5% year-over-year. The core PCE, which excludes volatile food and energy prices, rose 0.2% from the previous month, a larger increase than May's 0.1%. Compared to one year ago, it was unchanged at a 2.6% increase.

Seokhwan Kim, a researcher at Mirae Asset Securities, explained, "The core PCE, which is the standard for judging inflation, was the same as last month, but annualized over three months, it fell to 2.3%, marking the lowest level this year." He added, "As a result, the market showed increased expectations for a base interest rate cut."

The Korean stock market is also expected to be influenced by expectations of an interest rate cut. Researcher Kim said, "Although the KOSPI has fallen for three consecutive weeks, it is expected to attempt a rebound at a significant support level, showing signs of a trend reversal." He analyzed, "As U.S. inflation trends ease and expectations for interest rate cuts grow, relative benefits are expected in the domestic market for financials, real estate, and small- and mid-cap stocks."

However, Kim added that the 'magnitude' of the rebound will depend on how much the weakened investment sentiment in semiconductors, automobiles, and secondary batteries?which experienced concentrated selling last week?recovers.