US Inflation Peak Theory Brings 'Tailwind' to Won Strength... Kospi Breaks Resistance Line and Closes Higher

KOSPI Closes at 2669.66, Up 1.20% from Previous Trading Day
Psychological Resistance Level 2650 Recovered After 17 Trading Days

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] The domestic stock market closed higher on the 30th, buoyed by simultaneous buying from institutions and foreigners. Analysts attribute this to signs of a peak-out in U.S. inflation, which had previously suppressed risk asset investment sentiment, as well as anticipation ahead of the release of producer statistics that could gauge China's economic recovery.

On the day, the KOSPI index closed at 2,669.66, up 31.61 points (1.20%) from the previous day. The index, which started the day up 0.88%, saw its gains widen as foreigners switched to net buying during the session. Foreigners net purchased approximately 355.8 billion KRW worth of domestic stocks, while institutions led the rally with net purchases worth 419.3 billion KRW. Conversely, individuals net sold about 799.5 billion KRW.

The KOSPI's rise was largely influenced by the sharp rebound in the U.S. stock market over the past weekend amid growing expectations of a peak-out in inflation.

The U.S. Department of Commerce reported that the April Personal Consumption Expenditures (PCE) price index rose 6.3% year-on-year and 0.2% month-on-month. This figure is lower than March's 6.6% year-on-year increase, which was the largest in 40 years. The inflation gauge referenced by the U.S. Federal Reserve (Fed) showed a slowdown in its rate of increase for the first time in a year and a half since November 2020.

As a result, in the U.S. stock market, bargain hunting focused on technology stocks, which had plunged due to concerns over stagflation (a phenomenon where inflation and economic stagnation occur simultaneously).

The KOSPI market also showed a synchronized pattern with the U.S. market, with technology stocks rising sharply. Among the top market capitalization stocks, NAVER rose 4.26%, and Kakao increased by 2.69%.

Additionally, most of the top market cap stocks such as Samsung Electronics (1.80%), LG Energy Solution (2.09%), and LG Chem (1.45%) posted gains. On the other hand, Samsung SDI fell 1.36% following a Goldman Sachs report predicting a hit to earnings due to falling prices of metal raw materials used in secondary batteries. SK Innovation also showed a slight decline of 0.24%.

On this day, the KOSPI market had 843 advancing stocks, far outnumbering the 268 declining stocks.

By sector, shipping stocks fell the most, with HMM down 5.33% and Pan Ocean dropping 7.05%. The electric and gas sector also declined over 1%, weighed down by weaknesses in Korea Electric Power Corporation (-2.10%) and Korea Gas Corporation (-2.02%).

Kim Seok-hwan, a researcher at Mirae Asset Securities, said, "The rise in the U.S. stock market driven by growing expectations of an inflation 'peak-out' has led to a recovery in domestic market investment sentiment. The won-dollar exchange rate falling to the 1,240 won level has also positively contributed to increased foreign buying." He added, "The decline in shipping stocks is due to profit-taking after recent gains and a 20% drop in the Baltic Dry Index (BDI) as large vessel congestion eased with the resumption of port operations in China."

The KOSDAQ index rose 12.47 points (1.43%) to 886.44. While individuals net sold about 44.5 billion KRW, foreigners and institutions net bought approximately 44.5 billion KRW and 83.5 billion KRW, respectively.

Among the top market cap stocks on KOSDAQ, Wemade surged 10.13% as the stability of its self-issued coin, WEMIX, was highlighted, and EcoPro BM also closed up 4.73%.

HLB fell 6.28% ahead of the Phase 2 clinical trial results next month for ‘Rivoceranib,’ an anticancer drug under development.

Lee Kyung-soo, a researcher at Daishin Securities, said, "With the Chinese PMI (Purchasing Managers' Index) expected to improve tomorrow and the KOSPI surpassing the resistance level of 2,650, which had been a barrier, the stock market is likely to continue its upward trend for the time being."

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