[Market ING] FOMC to Be a Crucial Turning Point for KOSPI's Hold on the 7,000 Mark

Weekly KOSPI Forecast Range: 6,000–7,000 Points

Last week, the KOSPI Index regained the 7,000-point level for the first time in 33 days, but failed to hold onto it. Due to rising oil prices and concerns over interest rates, the market fell for two consecutive days at the end of the week, losing the 7,000 mark. As a result, market attention is likely to focus on the U.S. Federal Open Market Committee (FOMC) meeting scheduled for September this week.

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Last week, the KOSPI rose by 3.33% and the KOSDAQ by 0.88%, respectively. The KOSPI returned to an upward trend for the first time in four weeks. Kim Jongmin, a researcher at Samsung Securities, commented, “Unfavorable macroeconomic conditions are persisting. Global oil prices have exceeded $100 per barrel, and bond market turbulence caused by inflationary pressures pushed the yield on the U.S. 10-year Treasury bond close to 5%. U.S. President Donald Trump mentioned that the war with Iran would end right after the November U.S. midterm elections, making it difficult for inflationary pressures to ease for the time being. However, the stock market remains more resilient than expected, driven by the strong momentum of artificial intelligence (AI). For now, a tug-of-war will continue, with macro-level upward constraints competing against micro-level downward support, as the market seeks a new direction.”

Against this backdrop, market volatility may expand again this week as both the U.S. September FOMC and Japan's key interest rate decision are on the calendar. Lim Jeongeun, a researcher at KB Securities, stated, “Weekly returns for the KOSPI and KOSDAQ were 3.33% and 0.88%, respectively, performing well despite external pressures. This week, cautious attention should be paid to macro sensitivity and market volatility in response to major events, as both the FOMC and the Bank of Japan (BOJ) monetary policy meetings are scheduled back to back.”

Lee Kyungmin, a researcher at Daishin Securities, added, “The BOJ is widely expected to raise rates, and if it does, the resulting yen strength and climb in Japanese government bond yields could trigger a rise in key global government bond yields and concerns about unwinding yen carry trades—this may increase short-term volatility in Korea’s stock market. However, the conclusion of major central bank policy events may also signal a turning point that eases or removes monetary policy uncertainty.”

The August U.S. Consumer Price Index (CPI), released last week, met expectations. On September 11 (local time), the U.S. Bureau of Labor Statistics announced that the CPI for August had risen 3.4% year-on-year. On a monthly basis, it increased by 0.4%, in line with market forecasts. The core CPI, which excludes energy and food, was up 2.4% year-on-year and increased 0.3% from the previous month. While year-on-year gains met analyst expectations, the monthly increase slightly exceeded forecasts.

The September FOMC meeting is expected to center on the dot plot and remarks from Federal Reserve Chair Kevin Warsh. Lee Sangjun, a researcher at NH Investment & Securities, observed, “The possibility of an upward revision to the dot plot remains open. The futures market is already pricing in three more hikes by 2027. Unlike the unanimous hold in June, three members voted for a hike at the July meeting. Additionally, geopolitical risks in the Middle East—another upward factor for rates—have not subsided, so rate volatility could persist even after the FOMC. In the short term, the expansion of volatility due to external risks is inevitable, but it should be distinguished from any damage to fundamentals.” NH Investment & Securities forecasted a KOSPI range of 6,400 to 7,400 this week.

This week's key economic events include the September New York Federal Reserve manufacturing index for the U.S., China's August retail sales, industrial production, and fixed asset investment on the 15th, and the U.S. retail sales report on the 16th. On the 17th, the September FOMC meeting will be held, followed by the BOJ monetary policy meeting on the 18th.

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