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South Korean stocks, led by the KOSPI, rallied as US inflation data fell short of expectations - sparking hopes for potential rate cuts.

What does this mean?

The US inflation data delivered a pleasant surprise, coming in lower than anticipated and fueling optimism for rate cuts soon. This bolstered South Korean equities, with major players like Samsung Electronics and SK Hynix posting gains of 1.51% and 2.85%, respectively. However, not all fared well; LG Energy Solution dropped by 1.26%, and tech giants Naver and Kakao saw declines as well. Despite diverse performances among sectors, the broader sentiment was upbeat, with foreign investors buying 66.7 billion won in shares. As consumer spending in the US remained robust, the Federal Reserve adjusted its rate cut projections for 2025, suggesting a cautious approach. Meanwhile, the strengthening South Korean won and mixed movements in treasury bond yields added layers of complexity to the market dynamics.

With the KOSPI up thanks to easing US inflation fears, South Korean markets are buzzing. Foreign interest and shifting monetary policies might just turn this year's 8.12% KOSPI decline into a backdrop for fresh opportunities.

The bigger picture: Global inflation shifts the playing field.

As the US handles inflation teetering on the lower edge, economic narratives are reshaping. South Korea's markets are reacting, but so are global expectations, with the won showing resilience and treasury yields offering mixed signals for cautious investors.