Last week, the domestic securities market showed strength on expectations of benefits from policy changes such as the revision of corporate law, but it partially gave back gains as concerns over inflation dampened hopes for a U.S. interest rate cut. The KOSPI index started the week at 3,175.77 points (p), rose to 3,215.28 p, and finished trading at 3,188.07 p. During this period, the KOSPI and KOSDAQ indices rose by 0.39% and 2.52%, respectively.
The increase in the securities market that has continued in the first half of this year seems to be slowing down somewhat, but this week (21st-25th) marks the full-fledged start of the domestic and international earnings season. It is expected that the aggressive tariff policy of the Trump administration will be assessed for its impact on corporate profits.
There is also interest in whether the recent cyclical rotation in the domestic securities market will continue. Sectors that had seen rapid increases are now experiencing profit-taking, while buying momentum is flowing into sectors such as secondary batteries and steel that had not been highlighted until now. If the rotation is successful, it could provide additional upward momentum for the KOSPI index, which is hovering around 3,200.
On the 23rd (local time), the United States will begin with General Motors (GM), followed by Tesla and Alphabet on the 24th, and Intel on the 25th, all set to announce their earnings. If these corporations announce results that fall short of forecasts, controversy over stock price overvaluation may arise.
Particularly noteworthy in this earnings announcement is whether corporations will pass on the increased costs due to tariffs imposed by U.S. President Donald Trump to consumers. If consumer prices rise, it will be challenging for the Federal Reserve (Fed) to lower interest rates.
Recently, President Trump has been taking a strong stance, moving to push for the dismissal of Federal Reserve Chairman Jerome Powell, who has been delaying decisions on interest rate cuts. Powell's speech is scheduled for the evening of the 22nd, Korea time, and it is essential to observe whether he will signal regarding his position on related issues and the timing of the commencement of interest rate cuts.
As the reciprocal tariffs in the U.S. will begin on the 1st of next month, fluctuations in stock prices surrounding tariff negotiations are expected to continue. Lee Kyung-min, a researcher at NH Investment & Securities, noted, "Unless results from the tariff negotiations exceed investor expectations as the deadline for the reciprocal tariffs approaches, the sentiment could weaken and the global securities market may be affected."
Starting this week, major corporations in Korea will consecutively announce their second quarter earnings. On the 23rd, Samsung Biologics will report, followed by SK hynix and Hyundai Motor, Kia, Samsung SDS, and KB Financial on the 24th, and LG Electronics and LG Energy Solution on the 25th.
Na Jeong-hwan, a researcher at NH Investment & Securities, said, "Despite the U.S. sending a letter regarding reciprocal tariffs to Korea on the 8th, the KOSPI index continued to rise," adding, "During the earnings season, there will likely be a 'picking of grain from chaff' of stocks expected to see earnings growth among those sectors that have risen significantly in the indices and securities."
NH Investment & Securities expects the KOSPI index to move within the range of 3,000 to 3,250 p this week. Na noted, "The abundant funds awaiting investment in the domestic securities market will act as a factor for a rise, while the diminished expectations for U.S. reciprocal tariff negotiations and interest rate cuts will serve as bearish factors for the index."