Kospi rises to 2,640 level on hopes of end to Fed tightening

[Photo by Yonhap]

South Korea’s benchmark stock index Kospi began Tuesday’s trading session with an upward trend, showing gains from the 2,640 level on expectations that the Federal Reserves may halt interest rate increase this month.

As of 9:13 am, the index stood at 2,643.36, up 14.01 points or 0.53 percent from the previous session. The benchmark stock index opened at 2,644.43, up 15.08 points or 0.57 percent.

Individual investors and foreign investors net bought stocks worth 60.4 billion won ($47.5 million) and 20.9 billion won, respectively. Foreign investors, however, net sold 66.1 billion won.

Overnight, investor sentiment in the U.S. revived after the Federal Reserve Bank of New York cut inflation rate projection to 4.1 percent from 4.4 percent for one year ahead. The announcement led to increased expectations of the possibility of a rate freeze based on the June interest rate outlook compiled by the Chicago Mercantile Exchange (CME) FedWatch, surpassing 70 percent.

As the release of the U.S. Consumer Price Index (CPI) for May and the Federal Open Market Committee (FOMC) regular meeting approached, the direction of the index is expected to be determined.

“Today’s domestic stock market will enter the sphere of influence of the FOMC, but we expect a positive stock price trend with a focus on large-cap stocks due to expectations for the U.S. May CPI,” said Han Ji-young, an analyst at Kiwoom Securities Co.

On Monday (local time), the Dow Jones Industrial Average gained 0.56 percent, the S&P 500 Index 0.93 percent and the tech-heavy Nasdaq Composite 1.53 percent.

Furthermore, major semiconductor stocks such as Micron Technology Inc. rose 3.09 percent, Intel Corp. gained 5.52 percent and Nvidia Corp. advanced 1.84 percent, contributing to the market’s upward momentum.

The Kosdaq index also rose by 4.18 points or 0.47 percent to 889.94 as of 9:13 am. The index started at 890.81, up 5.05 points or 0.57 percent.