[Good Morning Market] KOSPI Struggles at 3,200 as U.S. Inflation Worries Ease?Will It Break Out?

On August 14, the domestic stock market is expected to continue sector rotation trading, reflecting growing expectations for a U.S. interest rate cut.

Previously, the New York stock market closed higher across the board as expectations for a Federal Reserve rate cut gained momentum. The Dow Jones Industrial Average, led by blue-chip stocks, jumped 463.66 points (1.04%) to close at 44,922.27. The S&P 500, focused on large-cap stocks, rose 20.82 points (0.32%) to 6,466.58. The tech-heavy Nasdaq gained 31.236 points (0.14%) to finish at 21,713.14.

As the Consumer Price Index (CPI) for July 2025 came in below market expectations, data showed that tariff-driven inflationary pressures were not evident, further fueling expectations for a rate cut. Lee Sunghoon, a researcher at Kiwoom Securities, explained, "With most major U.S. companies having reported their earnings and the stock market's sensitivity to Trump-era tariffs having diminished, market attention is now shifting toward a potential Fed rate cut."

With the CPI released favorably, the Producer Price Index (PPI), which is considered a leading indicator for the CPI, will be announced this evening Korea time, followed by retail sales data the next day.

Lee added, "Today, the domestic stock market is expected to remain range-bound around the 3,200 level on the KOSPI, with supply and demand battling for dominance. However, volatility is likely to increase due to options expiration. Amid a decline in the U.S. 10-year Treasury yield, sectors that benefit from rate cuts, such as biotech, as well as industries and individual stocks with ongoing positive catalysts, are expected to continue showing differentiated performances."

Another factor to watch is the potential market impact of the government's soon-to-be-announced stance on the revision of the major shareholder capital gains tax. Lee pointed out, "While major stock markets in the U.S., Japan, and other countries are continuing a risk-on rally due to easing tariff uncertainties and growing expectations for a Fed rate cut, the domestic market remains capped due to unique policy uncertainties."