[Good Morning Stock Market] US Fed Officials' Remarks... Continued Foreign Outflow from Korean Stock Market

[Image source=Yonhap News]

As the New York stock market closed slightly higher overnight, the domestic market on the 24th is also expected to show a limited upward trend.

The U.S. New York stock market on the 23rd (local time) rose slightly despite concerns over manufacturing sector contraction, as some Federal Reserve (Fed) officials hinted at the possibility of an additional 'big cut' (0.5 percentage point interest rate cut) following the one on the 18th. The Dow Jones Industrial Average closed at a record high of 42,124.65, up 0.15% from the previous trading day. The S&P 500 index, centered on large-cap stocks, also closed at an all-time high of 5,718.57, up 0.28%. The tech-heavy Nasdaq index ended trading at 17,974.27, up 0.14%.

Fed officials left room for an additional big cut. Austan Goolsbee, president of the Chicago Federal Reserve Bank and a prominent dove (favoring monetary easing) within the Fed, said at an event that "the current benchmark interest rate is estimated to be several hundred basis points (1bp = 0.01 percentage point) above the neutral rate," and added, "It will take a long way to lower rates close to the neutral level over the next 12 months to maintain the current situation." Raphael Bostic, president of the Atlanta Fed, also saw room for the Fed to cut rates to the neutral level. However, Neel Kashkari, president of the Minneapolis Fed, said that unless the data changes substantially, "smaller steps will be taken," indicating the next cut might be 0.25 percentage points.

Manufacturing sector indicators were weak. The September Manufacturing Purchasing Managers' Index (PMI) released by S&P Global recorded 47, down from 47.9 the previous month and significantly below the market forecast of 48.6. The manufacturing PMI, a representative leading economic indicator, signals expansion when above 50 and contraction when below 50. This confirms that the U.S. manufacturing sector contraction phase continues. The services PMI recorded 55.4, slightly exceeding the expert forecast of 55.3, maintaining an expansion phase.

The domestic stock market continues to see foreign investor outflows. The KOSPI closed at 2,602.01, up 0.33% from the previous day, and the KOSDAQ index closed at 755.12, up 0.91%. Foreign investors sold a net 720.7 billion KRW worth of securities in the KOSPI market and 53.9 billion KRW in the KOSDAQ market in a single day, totaling a net sale of 774.6 billion KRW.

Attention is also being drawn to Micron's earnings announcement, which will influence investment sentiment in the semiconductor sector, a key factor determining the direction of the domestic stock market. Micron is scheduled to announce its earnings on the 26th (Korean time). Samsung Electronics' preliminary earnings announcement is also scheduled for the first week of October.

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "Foreign investors have recorded net sales on 11 out of 13 trading days in September, except for two days, limiting the upside of the KOSPI," adding, "In the short term, Micron's earnings will be an important turning point."