[Good Morning Market] Cautious Ahead of Holiday... KOSPI to Fluctuate Without Clear Direction

On September 29, the KOSPI is expected to fluctuate without clear direction, as investor sentiment is influenced by a tendency to increase cash holdings ahead of the Chuseok holiday.

On September 26 (local time), at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 46,247.29, up 299.97 points (0.65%) from the previous session. The S&P 500 Index rose by 38.98 points (0.59%) to 6,643.70, and the Nasdaq Composite Index finished at 22,484.07, up 99.37 points (0.44%).

The New York stock market rebounded after four sessions, as expectations for a rate cut remained intact. This was due to the August Personal Consumption Expenditures (PCE) price index matching market expectations (annual rate of 2.7%), despite President Donald Trump’s announcement of tariffs on pharmaceuticals.

Recently, the upward revision of the U.S. Gross Domestic Product (GDP) and hawkish remarks by Federal Reserve officials have heightened uncertainty regarding additional rate cuts within the year, prompting profit-taking in semiconductor stocks.

The most significant event this week is the release of the September U.S. employment data on October 5 (local time). The consensus (average forecast by securities firms) expects 50,000 new jobs and an unemployment rate of 4.3%, so a significant improvement is not anticipated. Since Federal Reserve Chair Jerome Powell highlighted downside risks in the labor market, market expectations have been lowered. In this context, weak employment data could strengthen the justification for further rate cuts by the Fed, following the 'bad is good' logic. Additionally, as seen during the employment shock in August, whether previous figures are revised will be another point of interest.

The U.S. September Institute for Supply Management (ISM) Manufacturing Purchasing Managers' Index (PMI) and Korea’s September export data also warrant attention. Through indicators such as new orders, export trends, and price components, it will be possible to gauge the impact of tariffs and the direction of third-quarter corporate earnings. Accordingly, differences in the resilience of domestic export stocks, such as semiconductors and automobiles, are expected to emerge.

The exchange rate is also a variable. Last week, the won-dollar exchange rate surged above 1,410 won. This was the result of several factors: the strengthening of the dollar due to diminished expectations for Fed rate cuts, increased purchases of U.S. stocks by domestic investors, and uncertainty over securing funds for investments in the U.S. However, over the weekend, Minister of Economy and Finance Koo Yooncheol stated that “currency negotiations with the U.S. have been completed,” suggesting that whether split payments or currency swaps are implemented will be key to stabilizing the market going forward.

Han Jiyoung, a researcher at Kiwoom Securities, commented, “The long Chuseok holiday, which starts on Friday, could create a short-term supply-demand vacuum in the stock market. Investors are likely to increase their cash holdings early in the week, concerned about external variables such as U.S. employment data and the performance of artificial intelligence (AI) stocks during the holiday period.”

She added, “Ultimately, this week’s stock market will likely fluctuate without a clear direction, as major events such as U.S. employment data, ISM manufacturing PMI, Korea’s export data, the outcome of currency negotiations, and supply-demand variables due to the Chuseok holiday all come into play.”