The U.S. FOMC and the BOJ meeting will be the focus this week, with markets expected to remain sensitive to downside risks for stocks as expectations grow that rate hikes may be deferred. Attention will also center on last week's stock market declines, CPI and oil price trends, and global interest rates.
Financial markets this week are expected to be driven by the U.S. FOMC and the Bank of Japan's Monetary Policy Meeting. The Nikkei generally trended lower last week, while South Korea's KOSPI at one point gave back some of its gains. Rising geopolitical tensions in the Middle East and upward pressure on interest rates in Japan and the United States weighed on investor sentiment.
With the possibility of a rate hike deferral being discussed at the FOMC, the dot plot and remarks by Fed Chair Warsh will be in focus. U.S. CPI rose 3.4% year on year in August, while core CPI rose 2.4%. Although the figures did not diverge significantly from market expectations, some market participants continue to believe that the possibility of an additional rate hike cannot be completely ruled out.
Oil prices rose above $100 a barrel against a backdrop of geopolitical risks in the Middle East. The approach of U.S. long-term interest rates toward 5% has also been cited as a factor suppressing demand for risk assets. In South Korea, institutional investors have continued to be net buyers in the securities market, while foreign investors have remained net sellers.
The BOJ will hold its Monetary Policy Meeting from the 17th. Although a policy rate hike is being discussed, Ide (井出) suggested that excessive downward pressure on stock prices could be avoided if the outcome is in line with market expectations. Another view is that Governor Ueda's (植田) stance on future rate hikes will be the focus.
Expectations for growth in AI-related sectors are still seen as having the potential to serve as a cushion for the stock market, and some anticipate that fund flows into semiconductor and data center-related stocks will pick up again. NH Investment & Securities has presented a forecast range of 6400-7400 for the KOSPI this week.