Foreigners Sell, Individuals Buy from Early Session... Stock Market Declines Amid FOMC Caution

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] On the 15th, the domestic stock market is on a downward trend. Although there is no large drop, it is also unable to rebound. The decline is controlled due to the easing of the U.S. stock market plunge, but cautious sentiment ahead of the June Federal Open Market Committee (FOMC) is limiting the upper range of the index, keeping it in a slightly weak state.

On this day, the KOSPI opened down 2.96 points at 2490.01 (0.12%↓). The KOSDAQ started the session down 1.31 points at 822.27 (0.16%↓). Both indices then managed to turn upward but returned to a downward trend, showing mixed movements. As of 9:15 a.m., the KOSPI stood at 2478.33, down 0.58%, and the KOSDAQ was at 820.14, down 0.40%.

From the start of the session, foreigners are selling. Only individuals are buying. Institutions are net buyers in the KOSPI market but net sellers in the KOSDAQ market. Individuals are net buying 88.1 billion KRW and 40.8 billion KRW in the two markets respectively. Foreigners are net selling 122.5 billion KRW and 39.1 billion KRW in the two markets respectively.

Top market capitalization stocks in the KOSPI also show mixed trends. Samsung Electronics is trading at 61,300 KRW, down 600 KRW (0.97%) from the previous trading day. LG Energy Solution (0.82%) and SK Hynix (0.61%) are also recording slight declines. On the other hand, Hyundai Motor and Kia are rising strongly by 3.5% and 2.69%, respectively, which is interpreted as a result of the end of the Cargo Solidarity strike. Top market capitalization stocks in the KOSDAQ are moving similarly. L&F, Celltrion Healthcare, and Pearl Abyss are slightly up, while L&F, Kakao Games, and CJ ENM are slightly down.

Seo Sang-young, head of the Media Content Division at Mirae Asset Securities, said, "The intraday rebound buying in tech stocks, which had recently fallen ahead of the FOMC in the U.S. stock market, is positive for the Korean stock market, but concerns related to the economic recession persist." He added, "Ahead of the FOMC, the Korean stock market will see differentiation centered on stocks that had large declines."

Han Ji-young, a researcher at Kiwoom Securities, forecasted, "The domestic stock market, which succeeded in narrowing the decline due to positive news from LG Energy Solution on the previous trading day, is expected to receive rebound factors such as the easing of the U.S. stock market plunge and technical buying today, but cautious sentiment ahead of the June FOMC will limit the upper range of the index."

Meanwhile, one day before the announcement of the Federal Reserve's (Fed) June FOMC regular meeting results, the New York stock market showed mixed trends. On the 14th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 30,364.83, down 151.91 points (0.50%) from the previous session. The Standard & Poor's (S&P) 500 index fell 14.15 points (0.38%) to 3,735.48, while the tech-heavy Nasdaq index rose 19.12 points (0.18%) to close at 10,828.35.

With the May Consumer Price Index (CPI) greatly exceeding expectations, speculation quickly rose that the Fed would take a giant step (a 0.75 percentage point rate hike), which is a larger increase than previously expected. Various U.S. media outlets such as Bloomberg and The Wall Street Journal (WSJ) reported that the Fed might raise interest rates by 0.75 percentage points at the FOMC meeting held on the 14th-15th. According to CME FedWatch, the interest rate futures market reflects a 94% probability that the Fed will raise rates by 0.75 percentage points at this meeting.

If the market's expectations for a giant step are realized, it will be the first time since November 1994, during former Chairman Alan Greenspan's tenure, that the Fed raised rates by 0.75 percentage points. Wall Street economists expect the Fed to raise rates by 0.75 percentage points in both June and July, 0.5 percentage points in September, and 0.25 percentage points in November and December. Accordingly, the year-end benchmark interest rate is expected to rise to 3.25%?3.5%. The current U.S. benchmark interest rate is 0.75%?1.00%.

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