[Good Morning Stock Market] KOSPI Expected to Face Increased Caution Ahead of US December CPI

US Stock Market Rises Early as PPI Misses Expectations
Cautious Sentiment Prevails Ahead of CPI Release Tonight
Short-term Profit-taking Pressure on Korean Stocks

On the 15th, the Korean stock market is expected to see increased caution ahead of the release of the U.S. December Consumer Price Index (CPI). This is influenced by the mixed closing of the U.S. stock market despite the Producer Price Index (PPI) falling short of consensus.

On the 14th (local time) in the New York stock market, the Dow Jones Industrial Average closed at 42,518.28, up 221.16 points (0.52%) from the previous trading day. The S&P 500 rose 6.69 points (0.11%) to 5,842.91, while the tech-heavy Nasdaq index fell 43.71 points (0.23%) to 19,044.39.

The decline in technology stocks was notable. Nvidia fell 1.1%. Apple dropped 0.48%, and Microsoft (MS) and Meta, the parent company of Facebook, declined by 0.36% and 2.31%, respectively. Palantir, an artificial intelligence (AI) software company, rose 1.43%.

The wholesale price index, PPI, affects the retail price index, CPI, with a time lag. Although the slowdown in PPI growth spread relief in the market, the U.S. stock market showed a cautious stance as attention shifted to the CPI data to be released tonight.

The CPI is a major inflation indicator closely watched by the U.S. Federal Reserve (Fed) along with the Personal Consumption Expenditures (PCE) price index. Concerns about "Trumflation" (inflation caused by Trump’s policies) are growing ahead of Donald Trump’s inauguration. The December CPI is attracting attention as it can confirm the future path of Fed monetary policy.

Currently, the consensus for December headline CPI and core CPI is expected to confirm upward inflationary pressure at 2.9% year-over-year (2.7% month-over-month for November) and 3.3% year-over-year (3.3% month-over-month for November), respectively.

However, concerns that the December CPI might be unfavorable to the stock market have already been reflected in the market correction, dollar, and interest rate rises since January. Therefore, if the December CPI meets consensus, a sense of relief is expected. Conversely, even if it exceeds consensus, if the core CPI meets or falls below consensus, the stock market is expected to show a neutral response.

Han Ji-young, a researcher at Kiwoom Securities, predicted, "Today, ahead of the CPI event, the market will enter a cautious phase with short-term profit-taking pressure mainly on the secondary battery sector, which surged sharply the previous day, and other recently rising sectors."