Could Falling Oil Prices Offer a Chance for a Stock Market Rebound?... The Problem Is the Second Half of Next Year [Weekend Money]

Inflation May Improve in the First Half of Next Year
Concerns Could Resurface in the Second Half of Next Year

The oil tanker HMM Universal Glory, which left the Strait of Hormuz last July, arrived at a pier in Yeosu. (File photo) Yonhap News Agency

Inflation is expected to improve in the first half of next year, compared with current levels, raising hopes for a stock market rebound.

In its “2027 Outlook” report released on November 14, KB Securities said that recent declines in international oil prices make it likely that inflation in the first half of next year will improve from current levels.

The report said that oil prices have recently fallen to their levels at the end of April, increasing the likelihood that prices of refined petroleum products, which directly affect consumer prices, will stabilize. It also noted that the increase in crude oil exports from the Middle East, which began in September, is helping stabilize oil prices.

According to KB Securities, a recent sharp rise in shipping rates drove Asian refiners’ imports of U.S. crude oil in November to their lowest level in seven years. The firm said imports of crude oil from the Middle East have recently increased as the burden of importing expensive U.S. crude has grown.

“As imports of crude oil from the Middle East increase, prices of refined petroleum products will fall, easing inflationary pressures after a time lag,” said Lee Euntaek, a director at KB Securities. “Even if negotiations with Iran do not succeed, we could see signs between the end of this year and the start of next year that inflation is being brought under control.”

However, he said inflation concerns could resurface in the second half of next year. “It is paradoxical for inflation to remain stable while the economy is expanding,” Lee said. “In particular, an investment boom could drive up the cost of labor and capital, which could in turn reignite inflation concerns.” He stressed that “the stock market could rebound in the medium term and then deteriorate again.”

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