[Good Morning Stock Market] US Stocks Fall Amid July CPI Caution... "KOSPI Expected to Start Lower"

[Image source=Yonhap News]

On the 10th, the domestic stock market is expected to start slightly lower. Profit-taking is anticipated following the sharp rise in the domestic market the previous day, amid a decline in the US stock market.

On the 9th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 35,123.36, down 191.13 points (0.54%) from the previous trading day. The S&P 500, focused on large-cap stocks, fell 31.67 points (0.7%) to 4,467.71, while the tech-heavy Nasdaq dropped 162.31 points (1.17%) to 13,722.02.

Investors are closely watching the July Consumer Price Index (CPI) data to be released the next day. Additionally, US investment restrictions on China under the Biden administration have had an impact. This CPI will serve as a key indicator for the Federal Open Market Committee (FOMC) interest rate decision in September. It implies potential influence on whether the Federal Reserve (Fed) will implement further tightening. President Joe Biden also announced an executive order regulating US capital investments from private equity and venture capital firms into Chinese companies whose total sales are predominantly in three advanced technologies: semiconductors, quantum technology, and artificial intelligence (AI), which has negatively affected the market.

Han Ji-young, a researcher at Kiwoom Securities, explained, "The market declined due to heightened caution over the US July CPI, Moody's downgrade of US regional banks' credit ratings, and concerns about deflation in China, which dampened investor sentiment."

Seo Sang-young, a researcher at Mirae Asset Securities, said, "The US stock market continued its downward trend ahead of the consumer price index announcement. The weakness in the US market was mainly due to high valuations and subsequent profit-taking, with a lack of additional upward momentum."

The Korean stock market is also expected to open lower due to these factors. The decline in the US stock market ahead of the US CPI release poses a burden on the Korean market. Researcher Seo stated, "The market expects the US consumer price index to be robust. There is a possibility of further Fed rate hikes, and economic indicators suggesting a slowdown in China's economy continue to be released." He added, "This is a factor that could lead to a prolonged slump in Korean exports and overall weakening of investor sentiment."

By sector, there are concerns about deteriorating investor sentiment in semiconductor-related industries. Researcher Han said, "From a sector perspective, AI-related semiconductor stocks such as Nvidia and Micron showed weakness due to concerns over AI chip supply disruptions and Biden's investment restrictions on Chinese advanced technology companies, which is expected to limit investor sentiment in related domestic sectors." He continued, "Although there were no new negative factors, it is necessary to prepare for potential volatility in domestic secondary battery stocks caused by the sharp declines in electric vehicle stocks such as Rivian, which plunged despite strong earnings, as well as Tesla and Nikola."

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