[Good Morning Stock Market] KOSPI Expected to Rally... Persistent Caution Ahead of US CPI Release

[Image source=Yonhap News]

As concerns over an economic slowdown triggered by U.S. employment data subside, the domestic stock market is expected to continue its relief rally on the 12th, following last week. However, caution is rising ahead of the U.S. Consumer Price Index (CPI) announcement.

Last week, the three major U.S. stock indices in New York showed gains for two consecutive days, recovering most of their weekly losses. Although the market was shaken by worsening U.S. July employment data, fears of the Federal Reserve (Fed) missing a rate cut, and aggressive unwinding of yen carry trades, improvements in new unemployment claims and continued expansion in the service sector and employment eased concerns.

On the 9th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 39,497.54, up 51.05 points (0.13%) from the previous session. The S&P 500 rose 24.85 points (0.47%) to 5,344.16, and the Nasdaq Composite increased by 85.28 points (0.51%) to close at 16,745.30.

Individual companies showed differentiated performances focusing on earnings results. Eli Lilly maintained a strong upward trend for two consecutive days. Expedia surged on strong earnings, while Elf Beauty plunged due to disappointing results.

The domestic stock market, which switched to a relief rally last Friday, is also expected to show a steady performance. The KOSPI closed at 2,588.43 on the 9th, up 1.24% from the previous session. The index opened higher at 2,603.08 but gave up some gains in the afternoon session amid yen strength triggered by an earthquake. The KOSDAQ also closed up 2.57% at 764.43.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The relief rally atmosphere is expected to continue from last week. However, with major economic indicators such as the U.S. July CPI and retail sales scheduled for midweek, investors' risk-averse sentiment is likely to persist."

He added, "Ahead of the August 14 deadline for semiannual report submissions, a rush of earnings announcements from more than 2,000 listed companies in Korea is expected. In particular, it is necessary to be cautious as small- and mid-cap stocks may experience sharp price fluctuations depending on their earnings results."