[MarketING] Consecutive Earnings Announcements, Impact on the Stock Market

Major Conglomerates' Earnings Announcements Continue Until the 1st of Next Month
Future Earnings Trends Crucial for Sustaining Stock Rally

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] As corporate earnings announcements continue, market interest in them is expected to grow. In particular, since major companies' earnings announcements are concentrated until the 1st of next month, stock price trends are also expected to be affected accordingly.

In Anticipation of the US FOMC, Earnings Interest Grows Amid Wait-and-See Sentiment

As of 10:15 AM on the 26th, the KOSPI is trading at 2,435.80, up 7.23 points (0.30%) from the previous day. The KOSDAQ is at 736.34, up 3.99 points (0.54%).

With major companies' earnings announcements continuing, individual stock movements are expected. On this day, Hyundai Motor is up 1%, and Kia is rising more than 2%. This is interpreted as due to Hyundai Motor's earnings announcement scheduled for the afternoon. Hyundai Motor is expected to have recorded its highest-ever quarterly earnings in Q4 of last year. According to financial information provider FnGuide, Hyundai Motor's Q4 operating profit consensus estimate is 3.0802 trillion KRW, a 101.36% increase compared to the same period last year. If earnings meet the consensus level, it will be the highest quarterly performance. Kia, which will announce earnings tomorrow (the 27th), has an operating profit consensus estimate of 2.3539 trillion KRW, a 100.31% increase compared to the same period last year.

Han Jiyoung, a researcher at Kiwoom Securities, said, "Due to the gap-up rise yesterday, short-term price pressure is causing profit-taking, so the index's upper range will face resistance," adding, "The stock market will proceed influenced by individual earnings results of major companies such as Hyundai Motor and EcoPro BM."

In particular, since major companies' earnings announcements are concentrated until the 1st of next month, it is expected to have a considerable impact on stock prices. Choi Yujun, a researcher at Shinhan Investment Corp., said, "From the 25th of this month to the 1st of next month, companies announcing earnings account for 55% of the KOSPI's market capitalization," adding, "Since large corporations dominate, earnings announcements can affect the entire value chain, and interpretations of the earnings announcements will be a major variable influencing stock prices."

Forming an Earnings Bottom Is Crucial for Further Stock Price Gains

For the stock market's bullish trend to continue, the direction of future earnings is important. There is an expectation that Q4 earnings of last year represent the bottom, and as long as earnings forecasts do not decline significantly thereafter, the upward trend can continue.

Researcher Choi said, "It is most important whether expectations for an earnings bottom are formed through earnings announcements," adding, "Since it is already known that Q4 of last year and Q1 of this year earnings are unfavorable, it is necessary to check whether subsequent earnings reflect China's reopening and the possibility of a soft economic landing." He added, "If expectations for an earnings bottom are formed, stock prices can gain more strength."

Researcher Han said, "From a technical perspective, the KOSPI and S&P 500 are approaching their 200-day moving averages, while the NASDAQ and KOSDAQ are near their 120-day moving averages, attempting to break through medium-term resistance levels," explaining, "The key variables for successfully breaking through and settling above medium-term resistance this time depend on the February US Federal Open Market Committee (FOMC) and changes in corporate guidance and analyst earnings estimates during the Q4 earnings season. Therefore, it is appropriate to respond to the resistance breakout with a short-term perspective of about one to two weeks."