[Good Morning Stock Market] US Inflation 'Peak Out' Expected... Market Starts Up, Then 'Wait and See' Outlook

[Asia Economy Reporter Ji Yeon-jin] The U.S. stock market continued its upward trend on the 9th (local time) amid growing expectations of economic normalization and inflation 'peak-out' (decline after reaching a high). As more states in the U.S. are implementing mask mandates, the anticipation of economic recovery has sustained the strong performance of cyclical stocks and reopening stocks. The Dow Jones Industrial Average rose 0.86%, while the Standard & Poor's (S&P) 500 and Nasdaq indices gained 1.45% and 2.08%, respectively. Due to these influences, the domestic stock market is also expected to start higher on the 10th. However, with the U.S. Consumer Price Index (CPI) announcement scheduled for the evening, caution is prevailing, so the extent of the rise is not expected to be large.

◆ Seo Sang-young, Researcher at Mirae Asset Securities = The U.S. stock market opened higher, supported by expectations of with-COVID-19 and stabilization of Treasury yields following remarks from Federal Reserve officials. Earnings announcements from individual companies also had a positive impact. Notably, technology stocks such as semiconductors and software, as well as with-COVID-19 related stocks including travel, leisure, and airlines, showed clear strength.

The MSCI Korea Index ETF rose 1.80%, and the MSCI Emerging Markets Index ETF increased by 1.57%. The 1-month NDF USD/KRW exchange rate stood at 1195.11, reflecting an expected 2 won decline in the USD/KRW rate at the opening.

The decline and stabilization of Treasury yields, confirmed by strong bond demand in the 10-year Treasury auction and less hawkish comments from Fed officials, contributed to the rise in the New York stock market, which is expected to positively influence the Korean stock market. However, since factors driving the U.S. market's rise?such as with-COVID-19 and Treasury yield stabilization?were partially reflected in the Korean market the previous day, the possibility of a significant increase in the rise is low. Especially with the U.S. CPI announcement approaching, a cautious stance is expected. The Korean market is anticipated to start with about a 0.7% rise, with changes expected depending on foreign investors' futures trends considering the options expiration day.

◆ Han Ji-young, Researcher at Kiwoom Securities = The U.S. stock market is regaining stability as the rapid rise in market interest rates has calmed. Concerns about the Federal Reserve's policy acceleration have not been completely resolved. In the federal funds futures market, the consensus on rate hikes has shifted from five times within the year (29.7% probability) in early February to six times (32.7%) currently. However, attention should be paid to the Cleveland Fed President's remarks on the 9th, indicating that a 50 basis point rate hike in March is unnecessary and that tightening policies will proceed depending on economic indicators. The U.S. January CPI, scheduled for release today, is expected to be a short-term turning point for the stock market. The consensus is 7.3% (previous month 7.0%), but the White House warned on the 9th that January CPI might be high, and since some component weights will change starting this year, the actual result may differ from the consensus. Depending on the CPI outcome, the market is expected to see intensified capital concentration among sectors and companies based on the possibility of price pass-through during the inflation phase.

Today, the domestic stock market is expected to show an upward trend influenced by the strength of growth stocks in the U.S. market. The after-hours surge in shares of Disney (+7% range) and Uber (+6% range), which reported strong earnings after the U.S. market close, is also expected to have a positive effect. However, due to caution over the U.S. CPI and volatility from options expiration, the overall index's upward momentum is likely to be limited, with differentiated stock price movements expected among sectors such as IT, reopening, and semiconductors, where positive changes in business conditions are anticipated.

◆ Seo Jung-hoon, Researcher at Samsung Securities = Last night, the New York stock market closed higher as bargain hunting entered oversold stocks. All sectors showed broad gains, with major technology stocks leading the market rise. The U.S. 10-year Treasury yield fell to 1.90% intraday, supported by strong bond auction demand, but later trimmed losses to close around 1.95%, down about 2 basis points from the previous day. West Texas Intermediate (WTI) crude oil rose about 0.3%. The dollar index showed a slight decline.

Despite the recent U.S. rate hike trend, the dollar's strength is limited. Dollar weakness is expected to be a factor that can lead foreign investors' inflows into the domestic stock market. Attention should be paid to large-cap IT, financials, and cyclical stocks favored by these investors.

This content was produced with the assistance of AI translation services.