The KOSPI index, which has been hot, has been moving sideways in the range of 3100 to 3200 for the second month. Last week (Sept. 1-5), the KOSPI started at 3186.01, fell to 3135.02, and finished the session at 3205.12 after a rebound. The KOSDAQ index, at least, regained the 810 level after a month, showing an upward trend for four consecutive trading days.
Domestic stocks have weakened due to disappointment following the announcement of Lee Jae-myung's government tax reform plan, and a cautious trend continues ahead of the Federal Open Market Committee (FOMC) meeting in the U.S. scheduled for September.
The U.S. labor market has shown signs of contraction. According to the U.S. Department of Labor, new non-farm jobs in August were only one-third of market expectations. The unemployment rate rose to 4.3% as expected.
With employment indicators coming out weakly, the U.S. Federal Reserve (Fed) is increasingly likely to lower interest rates this month. There are even forecasts of a 'big cut' of 0.5 percentage points at once. However, investors are unable to relax easily due to the possibility that the number and magnitude of additional rate cuts later this year may change depending on inflation trends.
This week, the direction of the stock market is expected to be determined by U.S. inflation indicators. The U.S. Producer Price Index (PPI) for August is scheduled to be released on the 10th, followed by the Consumer Price Index (CPI) on the following day. Since these are the last inflation indicators released before the September FOMC, the market may react sensitively.
Park Seok-hyun, an analyst at Woori Bank, noted, "If the Fed ties the (one-time) 'insurance cut' to the August employment and inflation indicators at the September FOMC, the risk of stock price adjustments may increase in the short term." He added, "On the contrary, if expectations for further rate cuts continue until the end of the year, the preference for risk assets may recover, and domestic and foreign stock markets could challenge the year's high again."
It is also necessary to watch the long-term interest rates on government bonds in global markets. Although U.S. long-term government bond rates have calmed down for now, the fiscal concerns from Europe that acted as a catalyst are still ongoing. In the past, when U.S. 30-year bond rates approached 5%, technology stocks faced downward pressure in valuations, which also negatively impacted the domestic stock market.
Attention is advised for the vote of confidence for the French government on the 8th and the review of France's credit rating by Fitch on the 12th. An analyst at Mirae Asset Securities said, "If the ruling party fails to secure a majority in the confidence vote for the French government, it is expected that not only will the prime minister be replaced, but also the 2026 budget will be revised toward a higher fiscal deficit than the draft. This could reignite fiscal concerns and stimulate long-term interest rates."
There remains uncertainty surrounding tariffs from the Trump administration in the U.S. Recently, a U.S. appeals court determined that some of the mutual tariff measures from the Trump administration were illegal. The Trump administration has filed for Supreme Court review by the 10th of this month. Though the likelihood is low, if the Supreme Court decides not to review, the appeals court ruling could be finalized immediately, nullifying the tariff measures. If the Supreme Court does take it up, the ruling is expected to come no earlier than the end of the year.
The projections for operating profit of domestic corporations for the third quarter (July-September) have been downgraded by 1.1% in the last month, and there may be variations by sector. Notably, sectors such as hotels and leisure, and shipbuilding saw an increase in profit expectations, while transportation, chemicals, and energy sectors decreased.
It is also essential to pay attention to sector-specific events amid macroeconomic indicators. For instance, Apple is set to unveil the iPhone 17 series on the 10th, which could impact the domestic value chain stock prices.
Jo Hyun-ji, an analyst at DB Securities, optimistically forecasted, "Apple's entry into the foldable phone market may act as a critical turning point in the ecosystem. It could shorten the replacement cycle of existing users and secure a new user base due to its strong brand power and iOS ecosystem, which may also lead to new demand sources for major component suppliers."