[Good Morning Market] Short-Term Volatility to Expand: "One-Time Rate Hike" vs "Start of Tightening"

Possibility of U.S. Benchmark Rate Hike Increases

"KOSPI Expected to Range Between 6,600 and 7,200 Points This Week"

As the September meeting of the U.S. Federal Open Market Committee (FOMC) approaches, short-term volatility in the Korean stock market is expected to increase. With a high likelihood of a rate hike at this month's FOMC, there is a divergence in interpretations as to whether this should be viewed as a one-time measure or the start of an additional tightening cycle.

On the 4th, Kiwoom Securities commented, "The market will show volatility from the beginning of the week. Attention will focus on responding to the September FOMC, which is scheduled for the early morning of the 17th." The firm set the expected weekly KOSPI range at 6,600 to 7,200 points. Key points to watch include: ▲ interpretation of the U.S. August Consumer Price Index (CPI) ▲ the possibility of a September FOMC rate hike ▲ the future direction of the yen following the Bank of Japan (BOJ) meeting ▲ changes in oil prices ▲ and changes in foreign investor flows.

On the 11th, employees are monitoring the stock market, exchange rates, and oil prices in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. Photo by Jo Yongjun

Recently, rising oil prices and August employment and inflation data have increased the likelihood of a U.S. benchmark rate hike. Han Ji-Young, an analyst at Kiwoom Securities, noted, "If the FOMC actually raises rates, it will be important whether this move is merely a one-off preemptive hike to prevent inflation from re-accelerating, or the start of a further tightening cycle." He added, "It will depend on how Federal Reserve Chair Kevin Warsh characterizes this move."

Regarding the outlook for the Korean stock market, he said, "Foreign investors are the key players in determining market direction. As the market digests the September FOMC event, it will be important to watch whether they resume net buying. If macroeconomic uncertainty eases—such as if the U.S. 10-year Treasury yield stabilizes below the 5% level during the week—foreign inflows are likely to improve, helping maintain the stock market's recovery trajectory."

He added, "The KOSPI is currently exhibiting a pattern of weakness in the early stages followed by recovery, mainly centered on semiconductors whose outlook remains intact thanks to robust demand for artificial intelligence (AI) and stable memory sector forecasts. During market corrections, buying demand and resistance to downward movements in the index are strengthening. Therefore, prioritizing a strategy that capitalizes on opportunities to increase equity exposure, rather than holding more cash, is appropriate."

Meanwhile, on the 11th (local time), the New York stock market rebounded after five sessions, buoyed by falling oil prices. The large-cap-focused S&P 500 Index closed at 7,656.98, up 0.86% from the previous session. The tech-heavy Nasdaq Composite Index finished up 0.96% at 26,333.04. The Dow Jones Industrial Average closed at 52,573.29, gaining 0.98% from the day before.

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