KOSPI Defends 6,600 Line a Day Before FOMC
A day before the FOMC decision, the KOSPI shook off intraday volatility to widen its gain from around 0.6% to as much as 0.8%, moving through the 6,670 to 6,685 range. The rebound followed four consecutive days of declines, but trading value itself fell sharply, with many market participants seen adopting a wait-and-see stance ahead of the outcome. The KOSDAQ briefly extended its losses during the session before paring the decline to around 0.5%, trimming its drop to near the 807 level.
Foreign investor flows remain skewed toward selling. Foreign investors sold more than 1.1 trillion won on the exchange alone, extending their net-selling streak to a sixth consecutive session, and have now sold more than 1 trillion won per day for five straight sessions. In the KOSDAQ market, foreign investors also posted net sales of roughly 80 billion won. In the futures market, however, foreign investors turned net buyers for the first time in five sessions, diverging from the spot market trend, prompting calls for closer monitoring going forward. The won-dollar exchange rate turned higher again to around 1,367 won, with some forecasts suggesting that exchange rate volatility could widen depending on the stance the Bank of Japan takes in its rate decision scheduled for the 19th.
The most important event is the US Federal Reserve's policy rate decision, scheduled for 3 a.m. Korea time, followed by Fed Chair Jerome Powell's press conference starting at 3:30 a.m. The market is focused less on the rate move itself and more on the commentary regarding the economy and inflation that follows. The scenario participants would welcome most is a rate hike as expected combined with reassuring remarks on future inflation and growth — a so-called dovish hike. However, concerns were also raised that, given the recent trend toward shorter press conferences, commentary this time could likewise be limited.