[Weekly Market Outlook] Limited Stock Market Rebound... Focus on Earnings Announcements

US FOMC and Big Tech Earnings Announcements as Variables
Limited Rebound Expected in Korean Stock Market
Domestic Large Corporations' Earnings Also Being Released One After Another

The stock market this week (January 29 to February 2) is expected to remain cautious ahead of the U.S. Federal Open Market Committee (FOMC) meeting. Since the Q4 earnings season has not yet concluded, the market is likely to continue being driven by individual stock performances.

On the 25th, the KOSPI and KOSDAQ opened lower, with the KOSPI falling more than 15 points shortly after the market opened. Photo by Heo Younghan younghan@

According to the Korea Exchange, on the 26th, the KOSPI index closed at 2478.56, up 5.82 percentage points (0.23%) from the previous week. During the same period, the KOSDAQ index closed at 842.67, down 5.43 points (0.64%).

Securities firms expect the market sentiment this week to be determined by the content of the January FOMC announcement.

Lee Kyung-min, a researcher at Daishin Securities, said, "With this year’s rate cuts already considered a given, attention should be paid to Fed Chair Powell’s press conference and any changes in the statement at the January FOMC," adding, "Discussions on the scale and end timing of QT (quantitative tightening) are key."

He continued, "Rate hikes and QT have been the Fed’s tightening tools, but if both shift to easing, it could be a positive catalyst and momentum for the stock market," explaining, "In that case, bond yields and the dollar’s rebound phase would come to an end, and a retest of the lows could unfold once again."

The earnings of major U.S. big tech companies are also expected to impact the domestic stock market. On the 30th (local time), Microsoft and Alphabet will announce their Q4 results. On February 1, Apple and Amazon will release their earnings. Accordingly, the expected KOSPI index range is projected to be between 2410 and 2530 points.

Kim Young-hwan, a researcher at NH Investment & Securities, stated, "Supported by strong earnings from big tech companies, a limited rebound in the domestic stock market is expected," and added, "The U.S. interest rate hold is certain, and the key is whether there will be hints about a rate cut in March."

There are also opinions that a favorable environment will continue for the Korean stock market this week, potentially reducing market volatility. Laborngil, a researcher at Shinhan Investment Corp., said, "Ahead of next week’s FOMC and big tech earnings, favorable conditions such as foreign capital outflows returning, government capital market support plans, and China’s stock market stimulus measures are continuing, leading to reduced volatility in the Korean stock market."

With no strong momentum to drive the index, a sector-by-sector rotation market is also expected. Q4 earnings announcements from major domestic companies such as Samsung SDI, LG Chem, Samsung Electro-Mechanics, and SK Innovation will continue this week.

Researcher Lee Kyung-min said, "Following semiconductors, shipbuilding, internet, pharmaceuticals, and bio sectors, the automobile and banking sectors are also participating in short-term rotation," adding, "The thoroughly neglected sector is secondary batteries, which have the highest price merit, but they are suffering from consecutive earnings shocks from major companies, sharp downward revisions of earnings forecasts, and selling pressure from foreign investors."