[MarketING] Waiting Mode Ahead of US Economic Data Release

KOSPI Starts Downward Then Turns Upward
KOSDAQ Fluctuates Around Stable Range

The KOSPI has been on the rise for four consecutive days, but with the upcoming release of U.S. economic indicators, cautious sentiment is strengthening, limiting the extent of the gains. A series of economic data releases, including the U.S. March Consumer Price Index (CPI), March Producer Price Index (PPI), March industrial production, and the Federal Open Market Committee (FOMC) minutes, are scheduled, so a wait-and-see stance is expected to continue for the time being.

KOSPI Turns Up After Opening Lower

As of 10:20 a.m. on the 12th, the KOSPI was up 7.67 points (0.30%) from the previous day, standing at 2555.53. The KOSDAQ fell 0.11 points (0.01%) to 898.83. The KOSPI turned upward after opening lower, while the KOSDAQ fluctuated within a narrow range.

This mixed trend in the domestic stock market appears to be influenced by the U.S. stock market's cautious sentiment ahead of the CPI release, which closed mixed within a narrow range. On the 11th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 0.29% compared to the previous day. The S&P 500 index remained almost unchanged at 0.0%, while the Nasdaq index closed down 0.43%.

Sangyoung Seo, a researcher at Mirae Asset Securities, said, "The news that 'the U.S. stock market can continue solid growth if financial system instability persists but does not expand' led most stocks to show strength, which is positive for the Korean stock market." However, he added, "The decline in large tech stocks, semiconductors, and software sectors, which had seen significant gains since the beginning of the year due to profit-taking, is a burden." He further explained, "While most sectors that had been weak due to recession concerns showed strength, tech stocks that had driven the rally weakened, indicating a rotation of buying and selling. The Korean stock market is also expected to follow this related trend."

Given the accumulated fatigue from the recent continuous rise and the expected profit-taking, the extent of gains is likely to be limited. Jiyoung Han, a researcher at Kiwoom Securities, said, "Since the KOSPI surpassed 2540 points yesterday and exceeded the long-term trend line of the 200-week moving average (2520 points), a technical upward momentum is expected. However, considering the profit-taking that may occur while trying to stabilize above the 200-week line and the cautious sentiment ahead of the U.S. March CPI release scheduled for this evening, the overall upward momentum of the index will be limited."

Wait-and-See Likely to Continue Amid Economic Data Releases

Following the U.S. March Consumer Price Index release this evening, the FOMC minutes and March Producer Price Index (PPI) are scheduled for the 13th, and industrial production and retail sales data will be released on the 14th, which is expected to keep caution high for the time being.

Kyeongmin Lee, a researcher at Daishin Securities, said, "It is highly likely that a verification phase between expectations and reality will unfold through economic indicators." He added, "While economic data generally continues to show weakness, inflationary pressures remain, which could simultaneously bring about economic anxiety and a retreat in expectations for interest rate cuts."

He warned of the need to be cautious about a phase where both bad news and good news are perceived negatively (Bad Is Bad, Good Is Bad). Lee explained, "If economic indicators are better than expected, expectations for interest rate cuts may retreat; if the data is weak, concerns about side effects and aftershocks from high-intensity tightening could increase."

While economic indicators need to be confirmed, there is a forecast that the U.S. Federal Reserve's monetary policy will be less negative for the stock market. A researcher said, "Just as the Bank of Korea hinted at ending tightening yesterday, the Fed, which has repeatedly delivered negative news to the stock market since last year, appears to be securing justification for ending tightening from the perspectives of economic and financial stability." He added, "It is necessary to watch the U.S. March CPI, but over time, the Fed's monetary policy is expected to shift toward providing a less negative environment for the stock market."

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