Rate cuts are a long way off. Whether they will really cut in June... remains to

Rate cuts are a long way off. Whether they will really cut in June... remains to be seen. / U.S. stocks end some of their losses after falling on solid consumer price index release

The U.S. stock market started lower as the consumer price index slightly exceeded expectations and concerns over high prices increased. In particular, most stocks fell due to the strong dollar and soaring interest rates on government bonds. However, as Nvidia (+1.97%) was strong under the influence of TSMC (+0.56%), the fall was partially reduced, led by Nasdaq. Meanwhile, the Fed mentioned a rate cut through the FOMC, but although the impact was limited, the trend continues to shrink ahead of the market close. However, the slump continues (Dau -1.09%, Nasdaq -0.84%, S&P 500 -0.95%, Russell 2000 -2.52%, and Philadelphia Semiconductor Index -1.65%) mainly in small and medium-sized stocks that are heavily burdened by high interest rates

* Variables: Interpretation of the Consumer Price Index and FOMC minutes released

The consumer price index in the U.S. rose to 0.4% month-on-month in March, the same as the previous month, but exceeded the 0.3% expected. The year-on-year rise from 3.2% to 3.5%. The core consumer price index's growth rate was higher than the 0.3% expected month-on-month, and the inflation remained high, exceeding the 3.7% expected at 3.8% year-on-year. In detail, gasoline (mom +1.7%) and housing (mom +0.4%) contributed more than half of the total increase. Used cars (mom -1.1%), new cars (mom -0.2%), and air freight (mom -0.4%) fell, but the medical service sector, which fell 0.1% last month, rose 0.6% led by hospital-related services (mom +1.2%). It is positive that housing costs rose 0.4% in the same way as last month.

In general, there was nothing shocking except for the medical service sector among the details. Nevertheless, there were reactions such as a strong dollar, a sharp rise in interest rates, and a fall in index futures after the announcement, given that prices are still solid. In CME FEDWatch, the probability of a rate cut in June decreased from 57,4% to 17.0. The probability of a rate cut in September also decreased from 91.5% to 73.8%. The probability of a third rate cut in December decreased from 55.4% to 18.7%, with market participants forecasting the first rate cut in September and two by December

Meanwhile, the minutes of the Fed's FOMC have been released, and all Fed members argue that this year's rate cut is appropriate. On top of that, they prefer to cut QT in half. However, they expressed concern, saying, "Although inflation has continued to decline, recent trends are uneven." Changes in the gold industry are limited after the announcement. International oil prices, which had been weak, shifted upward after the U.S. government announced that Iran would launch missiles against Israel during the day. As the solidity of the consumer price index also reflects the impact of the surge in the energy sector, the rise in related items will eventually lead to a solid rise in government bond rates, leading to a slump in the stock market.

* Featured stocks: Nvidia strengthens defense sector Vs.Ritz Financial, electric vehicle slump

Nvidia (+1.97%) has been weak recently due to news of chip development by major conglomerates, but rose today due to TSMC's influence. In addition, Morgan Stanley's raise of its target price was also positive. TSMC (+0.56%) rose on news that its March sales rose 34.4% year-on-year on strong demand for AI-based chips. However, as government bond rates surged, most of them fell, including AMD (-2.13%), Qualcomm (-2.68%), Intel (-2.95%), Analog Device (-3.82%), and Texas Instruments (-2.62%). Broadcom (-0.88%) and Micron (-0.35%) were relatively limited due to TSMC effects. The Philadelphia Semiconductor Index fell 1.65%.

Tesla (-2.89 percent) fell in the wake of a surge in government bond rates and a downward revision of its target stock prices by investment companies such as Jefferies. Ford (-3.55%) and GM (-1.77 percent) fell in the wake of a surge in interest rates despite Morgan Stanley and Barclays raising their target prices. Secondary batteries and charging industries related to the electric vehicle industry, including Rivian (-3.39 percent), Lucid (-1.85 percent), QuantumScape (-5.26 percent), Blink Charging (-4.53%) and EVGO (-4.59%) also fell.

Alibaba (+2.19 percent) gained ground after Jack Ma claimed that his performance could improve due to high potential for AI and ongoing restructuring. However, most Chinese companies such as Pinduoduo (-1.16 percent), Baidu (-1.83%) and NetEase (-1.11 percent) are sluggish due to the downgrade of their Chinese credit rating outlook. Defense sectors such as Lockheed Martin (+0.92 percent), General Dynamic (+0.42 percent), and Northrop Grumman (+0.71 percent) rose as the possibility of Iran's attack on Israel was highlighted. Walmart (+1.39 percent), Costco (+0.56 percent), and P&G (+0.37 percent) are solid.

Albemarle (-1.17%) was strong after the BOA raised its investment opinion to buy, citing rising lithium prices, but fell as it was put up for sale in the wake of a surge in interest rates. Delta Air Lines (-2.28 percent) rose due to higher-than-expected earnings and the fact that it is about to hit peak travel season, but fell due to a surge in interest rates. Most airlines, including American Airlines (-3.87%) and United Airlines (-2.46%), were also sluggish. REITs financials such as American Tower (-5.63 percent), Equinix (-3.15 percent), Realty Income (-4.12 percent), as well as utility industries such as NextEra Energy (-2.10 percent) and Duke Energy (-1.96%) fell due to the surge in government bond rates.

* South Korean stock market-related figures

MSCI South Korea's index .ETF fell 3.83%, MSCI's emerging index .ETF fell 1.36%. Philadelphia's semiconductor index fell 1.65%, Russell 2000 fell 2.52% and the Dow transport index also fell 2.29%. Night futures are closed. One-month NDF dollar/won exchange rate, which affects the dollar/won exchange rate, closed at 1,354.90 won last Tuesday, was at 1,361.50 won

* FICC: U.S. Treasury rates soar

International oil prices fell as the dollar strengthened. However, as concerns over the Middle East continued to grow, the extent to which the U.S. Energy Information Administration reported last week that crude oil inventories had increased from 3.2 million barrels to 5.8 million barrels, but the decline was limited. Since then, the U.S. has sharply shifted upward on the announcement that Iran's missile attack on Israel is imminent.

The dollar weakened expectations for a rate cut within this year as the consumer price index remained solid, and strengthened against other exchange rates. The euro and pound weakened more than 1% due to the strong dollar, and the exchange rate of other emerging economies, including the offshore yuan, also weakened against the dollar

Treasury yields surged sharply as the U.S. consumer price index was stronger than expected. The rise widened after confirming a slowdown in demand, with the 10-year Treasury bid at 2.34 times, below the one-year average of 2.49 times, and the indirect bid at 61.8%, below 66.2%. The 10-year Treasury yield once topped 4.56% and the two-year bid also neared 5%

Gold falls as government bond rates soar along with a strong dollar. Copper and others are also sluggish in the wake of a strong dollar. Wheat rises as grain exports from the Black Sea remain uncertain despite a strong dollar. Soybean and other crops fall in the wake of a strong dollar.