KOSPI Weighed Down by Interest Rate Fatigue: Key Indicators to Watch This Week [Market ING]

Weekly KOSPI Expected to Trade in the 6,200–7,300 Band
Focus Shifts to Upcoming U.S. Inflation Data

Last week, the KOSPI continued its downward trend for the third consecutive week, weighed down by interest rates. While the market is expected to remain in a consolidation phase within a trading range for the time being, attention is turning to the upcoming U.S. inflation data scheduled for this week.

Yonhap News Agency

Last week, the KOSPI dropped by 1.50% and the KOSDAQ fell by 2.97%. Kwon Soonho, a researcher at Daishin Securities, stated, "Despite solid export and earnings momentum for both semiconductor and non-semiconductor sectors, external uncertainties dragged down the domestic stock market." He added, "As military clashes between the United States and Iran have resumed, heightened tensions have driven up both international oil prices and government bond yields, leading to increased financial market volatility."

With the influence of interest rates growing, the market is expected to pay close attention to rate developments in the near term. Lee Jaewon, a researcher at Yuanta Securities, explained, "What last week's market reconfirmed is that the key factor for September is ultimately interest rates." He added, "When the yield on the U.S. 10-year Treasury exceeded 4.8% on September 2, flows into risk assets and smart money became unstable. However, after New York Federal Reserve Bank President John Williams and then Fed Governor Christopher Waller both took a cautious stance toward a rate hike in September, bond yields fell and both foreign investors and rate-sensitive growth stocks responded immediately."

Kim Jongmin, a researcher at Samsung Securities, said, "Fatigue in the stock market is accumulating due to the lack of upward momentum." He added, "The ongoing upward pressure on U.S. long-term bond yields and the continued geopolitical noise have been weighing on global investor sentiment. While the index currently lacks clear direction amid a lull in major events, the present phase is not a departure from an upward trajectory, but rather a period of sideways movement as the market digests fatigue from previous highs."

The consolidation trend is expected to persist for the time being. Kim Daejun, a researcher at Korea Investment & Securities, remarked, "With the sharp drop in July and the subsequent recovery in August, the KOSPI has strengthened its downside resilience, but a trend rebound will take more time." He continued, "Although the KOSPI’s 12-month forward price-to-earnings ratio (PER) remains low at 5.2 times as of September 2, macroeconomic uncertainty and a lack of earnings momentum could limit the upward movement of the index. It's highly likely the KOSPI will continue to consolidate within a limited range for now."

In particular, as last week's employment data exceeded expectations, the market is expected to focus on the U.S. inflation figures scheduled for release this week. According to the employment report released by the U.S. Department of Labor on September 4 (local time), the number of nonfarm jobs in the U.S. increased by 162,000 last month, far surpassing market expectations. Na Jeonghwan, a researcher at NH Investment & Securities, noted, "The Cleveland Fed forecasts an August consumer price index (CPI) rise of 3.38% year-on-year, similar to the previous month's 3.4%. Meanwhile, it expects core CPI to ease to 2.38% in August and 2.32% in September, down from 2.5% previously." He added, "With real economic indicators likely to support a rate freeze, it is premature to build investment strategies based on a rate hike at the September Federal Open Market Committee (FOMC) meeting before the August CPI announcement." NH Investment & Securities presented an expected KOSPI trading band of 6,200 to 7,300 for this week.

This week's major scheduled events include the release of China's August export data on September 8, China's August CPI and producer price index (PPI) on September 9, the U.S. August PPI on September 10 alongside the September European Central Bank (ECB) monetary policy meeting, and on September 11, Korea's export data for September 1-10, the U.S. August CPI, and the University of Michigan consumer sentiment index for September.

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