[Good Morning Market] Focus on U.S. CPI and China's 4th Plenary Session... Korean Stocks Expected to Consolidate

Delayed Release of U.S. September CPI Raises Questions Over Rate Cuts
Corporate Earnings Announcements from Tesla and Others in Focus
China's 4th Plenary Session to Unveil Five-Year Economic Blueprint
Korean Stock Market Expected to Consolidate Amid Profit-Taking

Yonhap News Agency

The U.S. stock market is expected to monitor whether the upward trend will continue, focusing on the release of the September Consumer Price Index (CPI) and the probability of a Federal Reserve (Fed) interest rate cut. The domestic stock market is also projected to enter a consolidation phase as supply and demand fluctuate between major corporate earnings and expectations for a U.S.-China summit.

On the 17th (local time), all major U.S. stock indices, including the Dow Jones Industrial Average (+0.52%), S&P 500 (+0.53%), and Nasdaq (+0.52%), closed higher. Although concerns emerged over the financial health of regional banks, markets recovered on relief that these issues would not escalate into systemic risk.

This week (October 20-24), the market is paying close attention to third-quarter corporate earnings announcements and the September CPI, which will be released later than usual due to the temporary federal government shutdown. In addition to Netflix and Tesla, consumer goods companies such as Procter & Gamble (P&G), Coca-Cola, aerospace and defense company RTX, and IBM are also scheduled to announce their earnings.

Since these are not companies in the artificial intelligence (AI) and semiconductor sectors, which have been driving the stock market, even strong earnings may not trigger a sensitive reaction. However, if earnings fall short of expectations, it could be interpreted as a sign of weakening consumer demand.

The September CPI is scheduled to be released on the 24th. The release has been delayed by nine days due to the federal government shutdown. As it will be made public just before the Federal Open Market Committee (FOMC) meeting of the Federal Reserve on October 28-29, it is drawing significant attention. This is because it will offer insight into the policy direction of Fed officials and help gauge whether the current strong narrative of rate cuts will persist.

Regarding corporate earnings, analysts highlight the importance of Tesla's announcement on the 22nd (local time). The outlook for Tesla's stock price, influenced by profitability in the electric vehicle division and delivery forecasts following the expiration of tax credits at the end of September, is expected to have a short-term impact on the share prices of related domestic secondary battery companies. In Korea, Hyundai Motor Company and Kia are scheduled to announce their third-quarter earnings on the 23rd and 24th, respectively. Attention is focused on whether the momentum in their stock prices, driven by expectations for a resolution to the Korea-U.S. tariff negotiations, will continue after the earnings announcements.

The 4th Plenary Session of the 20th Central Committee of the Communist Party of China, which will be held for four days starting on the 20th, is also considered a major event. The Communist Party of China plans to discuss the 15th Five-Year Plan (2026-2030) during this session. With downward pressure on growth intensifying due to U.S. tariff burdens and sluggish domestic demand, attention should be paid to whether additional large-scale stimulus measures will be introduced, such as investments in advanced industry infrastructure like robotics and artificial intelligence (AI), and initiatives to boost domestic consumption.

Lee Sunghoon, a researcher at Kiwoom Securities, explained, "The U.S. stock market is facing short-term valuation pressures, with concerns about a prolonged shutdown, noise related to U.S.-China trade conflicts, and worries about the financial health of regional banks limiting further gains. Similarly, in the domestic market, as investors seek to realize profits from leading stocks near short-term highs, we expect a consolidation phase around the 3,800-point level, characterized by intense supply and demand battles."