A trader trades with a serious expression on the New York Stock Exchange (NYSE).  (Source = Reuters Union)

Eyes on the US CPI in April… Korea-US stock market, coin market, etc. ‘Jung Jung-dong’ while holding their breath

A trader trades with a serious expression on the New York Stock Exchange (NYSE). (Source = Reuters Union)

Ahead of the US Consumer Price Index (CPI) for April, which is scheduled to be announced at 8:30 am (local time) on the 11th, the Korean and US financial markets and coin markets are paying attention.

On May 10 (local time), the New York stock market in the United States was mixed throughout, but ended at a level similar to the previous trading day. On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 32,160.74, down 0.26% from the previous trading day. The Standard & Poor’s (S&P) 500 index rose 0.25% to 4001.05, and the Nasdaq index, which focuses on tech stocks, rebounded 0.98% to close at 11,737.67.

After the Fed’s big step (0.5 percentage point) rate hike, the New York stock market plunged, encouraging low-price buying, and the 10-year U.S. Treasury yield fell below 3%, which seems to have boosted investor sentiment. However, as downward pressure was also applied due to inflation concerns and concerns about an economic slowdown, a meaningful rise was not recorded.

Cryptocurrency markets, including Bitcoin (BTC), also stopped falling and entered a stable state. The day before (10th), Bitcoin showed a steep decline and collapsed at $30,000 during the day. However, after that, as low-priced purchases from investors who set the $30,000 support level were rushing in, it recovered to $32,000 during the day and went up and down. According to CoinMarketCap as of 10:50 am on May 11th, Bitcoin was trading at $3934.61 per BTC.

Accordingly, attention is focused on the US CPI announcement for April on May 11 (local time). The key question is whether we can witness the slowdown in inflation from the April CPI report. If the CPI is higher than the previous month, tightening policy is inevitable. If the austerity policy is radically implemented like a ‘giant-step (0.75% point) rate hike’, a bear market is expected for the major US stock markets, and a negative current is expected to flow in the cryptocurrency market, which has been rapidly synchronizing recently.

Conversely, if the price index is judged to be good, it can signal a rebound. Cantering Clark, a cryptocurrency analyst The price of Bitcoin could drop to as low as $20,000.”

The current market forecast for CPI for April is 8.1%, and it is comforting to investors that the growth rate is likely to slow down compared to the previous month’s 8.5%. On the afternoon of the 10th (local time), US President Joe Biden’s remarks that he would “actively respond to inflation” were also receiving positive reviews from the market. If the April CPI falls below the previous month’s level, the government’s aggressive response could lead to a downward stabilization of inflation in the short term.

On the same day, the domestic stock market also seems to remain vigilant ahead of the announcement of the US CPI. The KOSPI (KOSPI) is in a mixed state with large fluctuations from the 2590 line, staying below the 2600 line. According to the Korea Exchange on May 11, the KOSPI is pointing to 2589.65, down 0.19% from the previous trading day at 11:05 am. Most of the top 10 stocks by market cap are also mixed, fluctuating around 1-2%. Also, it seems that there is a waiting-and-wait sentiment ahead of the CPI results.

Hwang Ji-yeon, an analyst at Kyobo Securities, said, “If the CPI is in line with the market’s expectations, it can be positive for the market with the expectation that inflation will peak and fall. Therefore, it should be approached with caution in a market situation where various uncertainties are mixed.”

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