U.S. Stock Market in Limbo: Investors on Edge Ahead of Crucial CPI Data

■ Korean Stock Market

The KOSPI index closed at 2,403.76, down 0.24%, as foreigners and individuals made net sales together.

Regarding supply and demand, foreigners and individuals each sold a net of 306 billion won ($257 million) and 224 billion won ($188 million), respectively. At the same time, institutions purchased a net of 361 billion won ($303 million). In the futures market, foreigners and institutions each sold a net of 749 contracts and 2,586 contracts, while individuals purchased a net of 1,831 contracts.

The won-dollar exchange rate was recorded at 1,325.1 won, up 8.3 won from the previous trading day.

Declining stocks dominated the KOSPI market cap’s top stocks. LG Electronics (-1.54%), Kakao (-1.42%), KB Financial (-1.12%), NAVER (-1.08%), POSCO FutureM (-0.90%), LG Chem (-0.87%), Samsung Biologics (-0.83%), Samsung SDI (-0.71%), Hyundai Mobis (-0.67%), Celltrion (-0.25%), Hyundai Motor (-0.23%), Samsung Electronics (-0.14%) and others declined.

On the other hand, Samsung C&T (+1.57%), LG Energy Solution (+1.09%), POSCO Holdings (+1.01%), SK Hynix (+1.00%), Shinhan Financial Group (+0.28%), Samsung Life (+0.14%) and others rose. Korea Electric Power (+5.43%) surged on news of a return to black after 10 quarters.

The KOSDAQ index closed at 774.42, down 1.89%, continuing to fall more than 1% for five consecutive trading days.

The aftermath of the short-selling ban continues, with secondary battery-related stocks recording declines for consecutive days. Semiconductor-related stocks, including Hanmi Semiconductor, showed weakness amid the earnings shock, while game, entertainment, and pharmaceutical/biotech-related stocks fell sharply. Meanwhile, newly listed SY Steel Tech (+125.83%) and A-Jik Land (+21.20%) surged on the day.

In terms of supply and demand, foreigners and institutions each sold a net of 286 billion won ($240 million) and 913 billion won ($767 million), while individuals purchased a net of 1,179 billion won ($991 million).

Declining stocks dominated the top KOSDAQ market cap stocks. Pearl Abyss (-7.00%), SM (-6.99%), HPSP (-6.28%), JYP Ent. (-5.61%), Alteogen (-4.95%), Iotech (-4.56%), Clasis (-4.33%), LN F (-3.91%), EcoPro BM (-2.58%), HLB (-2.47%), Kakao Games (-2.31%), Reno Industrial (-1.71%), Celltrion Healthcare (-0.43%), POSCO DX (-0.35%) and others declined. On the other hand, Solvbrain (+3.40%), Dongjin Semichem (+1.54%), WeMade (+0.85%), Celltrion Pharm (+0.57%), EcoPro (+0.44%), Rainbow Robotics (+0.27%) and others rose.

■ U.S. Stock Market

The New York Stock Exchange closed mixed on the day amid heightened caution ahead of this week’s temporary budget deadline and the announcement of the Consumer Price Index (CPI).

At the New York Stock Exchange, the Dow Jones index closed at 34,337.87, up 0.16%. The tech-heavy Nasdaq index closed at 13,767.74, down 0.22%, the S&P500 index closed slightly lower at 4,411.55, down 0.08%, and the Philadelphia Semiconductor Index closed at 3,556.74, down 0.97%.

Concerns about a shutdown are growing as news of Moody’s downgrade of the U.S. national credit rating outlook is announced ahead of this week’s temporary budget deadline. The temporary budget passed by the U.S. Congress is facing a deadline of the 17th, and if the budget does not pass through Congress by then, a shutdown, which would halt some of the U.S. federal government’s operations, would occur.

Meanwhile, with the handling of the temporary budget still unclear, Moody’s, an international credit rating agency, maintained the U.S.’s credit rating at the highest ‘Aaa’ after the close of the New York Stock Exchange on the 10th but downgraded its credit rating outlook from ‘stable’ to ‘negative.’ Moody explained the downgrade as “the lack of effective fiscal policy measures to reduce government spending or increase revenue in the face of high-interest rates.”

Concerns about fiscal deficits and shutdowns are increasing as Moody’s, the only one of the three major credit rating agencies to maintain the U.S.’s national credit rating at the highest level, suggests a possible downgrade.

Attention is focused on the announcement of the CPI, a representative inflation indicator, on the 14th. Amid expectations that the Federal Reserve (Fed)’s rate hike has ended, the market is focusing on whether the October CPI figure, which could further strengthen these expectations, will be announced. According to Reuters’ tally, the October CPI is expected to have slowed to a 3.3% increase from the same month last year, down from 3.7% in September. However, the core CPI, excluding volatile food and energy, is expected to maintain a 4.1% increase, the same as in September.

Meanwhile, according to the New York Federal Reserve Bank on the same day, the median inflation expectation for next year fell from 3.7% in September to 3.6% in October. The expected inflation for the next five years also fell from 2.8% to 2.7%, and the three-year expected inflation remained at 3%. The University of Michigan announced on the 10th that the one-year expected inflation rose from 4.2% the previous month to 4.4%, recording the highest level in a year since November last year, and the long-term expected inflation for five years rose from 3.0% the previous month to 3.2%, recording the highest level since 2011.

In addition, this week, the earnings of retail companies such as Home Depot, Target, Walmart, and TJX, which can gauge the consumption situation in the U.S., and retail indicators are expected to be released. In particular, October retail sales, which will be released on the 15th, are expected to decrease by 0.1% compared to last year.

Meanwhile, according to the Chicago Mercantile Exchange (CME) FedWatch, the possibility of the Fed freezing interest rates in December reflected 85.7% in the federal funds (FF) interest rate futures market at the closing point, and the possibility of a 0.25% point increase reflected 14.3%.

On the same day, international oil prices rose due to an upward revision of OPEC’s oil demand outlook. The price of West Texas Intermediate (WTI) crude oil for December delivery on the New York Mercantile Exchange (NYMEX) closed at $78.26, up $1.09 (+1.41%) from the previous trading day.

By stock, Tesla (+4.22%) and Rivian (+5.13%) rose as it was revealed that CalPERS, the largest public pension in the U.S., had bought additional shares of Tesla and Rivian in the last quarter. Tesla also announced that it had added a clause allowing Tesla to purchase or agree to third-party sales if there is a sufficient reason and that consumers would not be able to resell it for a year ahead of the launch of its electric pickup truck, the Cybertruck, at the end of this month.

Nvidia (+0.59%) rose after announcing that it would launch new products with nearly twice the performance of existing ones from the second quarter of next year. Boeing (+4.01%) rose on news that Emirates Airlines would purchase 95 Boeing aircraft. On the other hand, Tyson Foods (-2.83%), the largest meat product company in the U.S., fell after reporting weaker-than-expected fourth-quarter sales, and Warner Bros Discovery (-2.37%) fell as Guggenheim pointed out the NFL issue.

■ Asian Stock Market

Asian stock markets, including Japan, China, Taiwan, and Hong Kong, experienced simultaneous gains.

On November 13th, the Japanese Nikkei Index closed at 32,585.11, marking a slight increase of 0.05%, driven by the stability of U.S. bond yields and the strength of technology stocks. Over the weekend, U.S. bond yields remained stable, similar to their levels on November 9th, and large-cap tech stocks, such as Microsoft, reached an all-time high, surpassing $370 during the trading session. Additionally, the Philadelphia Semiconductor Index surged due to an influx of buying interest. This positive news led to buying interest in technology stocks, including Hitachi (+1.60%) and Advantest (+1.53%).

Meanwhile, Japan’s 10th-month Producer Price Index (PPI), released by the Bank of Japan, showed a year-on-year increase of 0.8%, falling below the 2.2% (revised) recorded in September. Japan’s PPI has steadily decreased since reaching 10.6% in December of the previous year and declined by 0.4% compared to the last month.

In terms of individual stocks, Osaka Gas (+2.54%), Sumitomo Chemical (+2.20%), Sharp (+1.23%), Canon (+1.06%), and Toyota Motor (+0.50%) saw gains, while Nissan Motor (-3.85%), Sony (-2.43%), Astellas Pharma (-1.65%), and NEC (-1.45%) experienced declines.

On the other hand, cosmetic company Shiseido faced a significant drop (-14.33%) after announcing a 42% reduction in its core operating profit forecast for this year, down to 35 billion yen (approximately $3.05 billion), citing the impact of a boycott in China due to the release of contaminated water from Fukushima, following its earnings report after the market closed on November 10th.

On November 13th, the Chinese Shanghai Composite Index closed at 3,046.53, recording a slight increase of 0.25% amid anticipation surrounding the upcoming summit between U.S. President Joe Biden and Chinese President Xi Jinping during the APEC summit in San Francisco, which marks the first U.S.-China summit in a year. During the meeting, Biden is expected to advocate for expanded U.S. export controls and semiconductor export restrictions. Xi Jinping is reportedly seeking assurances that the U.S. will not support Taiwanese independence, refrain from a new cold war, and not suppress China’s economic growth.

Furthermore, on November 15th, China is set to release data on its Medium-term Lending Facility (MLF) rate, retail sales, unemployment rate, industrial production, and fixed asset investment, contributing to a cautious sentiment in the market.

Hong Kong’s Hang Seng Index closed at 17,426.21, up by 1.30%, while Taiwan’s Weighted Index ended the day at 16,839.29, marking a 0.94% increase.

By. Park Sang Chul