[Good Morning Market] US CPI and Regional Bank Stability... KOSPI Expected to Start Higher

US February CPI Up 6.0% YoY, In Line with Expectations
SVB Bankruptcy Concerns Ease... US Treasury Yields Rise Positively

The domestic stock market is expected to start higher on the 15th. The U.S. Consumer Price Index (CPI) met market expectations, and the aftershocks of regional bank failures have eased, influencing the U.S. stock market to rise.

Sangyoung Seo, Head of Media Content at Mirae Asset Securities, predicted, "The KOSPI will start with about a 1% rise and show a steady performance while paying attention to China's real economy indicators."

The first reason for expecting an increase is that the U.S. February Consumer Price Index (CPI) announced last night matched expectations. The Department of Labor reported that the February CPI rose 6.0% compared to the same month last year. It increased by 0.4% compared to the previous month. Both year-over-year and month-over-month figures matched the expert forecasts compiled by The Wall Street Journal (WSJ). The February CPI increase was smaller than January's (6.4%), marking the smallest rise since September 2021.

The core CPI rose 5.5% year-over-year and 0.5% month-over-month. The main driver of the core inflation was housing costs, including rent. Housing costs surged 8.1% year-over-year and 0.8% month-over-month, accounting for more than 60% of the core CPI increase.

The easing of concerns over the spread of the Silicon Valley Bank (SVB) bank run is also positive. Regional banks are regaining stability, as seen in the sharp rise in First Republic Bank's stock price, which had plummeted due to bankruptcy fears. The government's intervention to guarantee deposits is interpreted as stabilizing market sentiment.

However, considering Moody's downgrade of the outlook for the U.S. banking system, volatility expansion is still inevitable. As Moody's stated, the Federal Reserve's (Fed) high interest rates may persist long-term, continuing pressure on regional banks.

An issue that will affect the market today is the potential deterioration of U.S.-Russia relations. On the 14th (local time), the U.S. European Command announced that a U.S. drone operating over the Black Sea was shot down by a Russian fighter jet. The White House mentioned that a U.S. aircraft conducting routine operations in international airspace was intercepted and downed by a Russian fighter jet. As a result, the U.S. stock market partially gave up some of its gains.

The Korean stock market is expected to show strength, supported by continued price declines and the easing of the SVB bankruptcy situation. In particular, the relatively large gains in major indices influencing the Korean market, such as the Russell 2000 index rising 1.87% and the Philadelphia Semiconductor Index increasing 3.03%, are expected to have a favorable impact on investor sentiment.

Additionally, despite the CPI stabilization, the sharp rise in U.S. Treasury yields, especially short-term ones, is also positive. Although bond yields should fall with price stability, the recent decline in Treasury yields was influenced by concerns over an economic hard landing. The rise in Treasury yields yesterday is interpreted as a sign of stability in the bond market, which is a positive factor.

The U.S.-Russia conflict is unlikely to escalate significantly. This is because a meeting between the Russian ambassador to the U.S. and U.S. officials is scheduled, as well as talks between Chinese President Xi Jinping and Russian President Putin.

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