[Good Morning Market] Korea Expected to See Tug-of-War Around 3,200 Points as Earnings Season Kicks Off

Recently, as the stock prices of major domestic leading sectors such as HBM (High Bandwidth Memory), defense, and banking have undergone corrections, it is expected that the KOSPI will see a tug-of-war around the 3,200-point level this week as the full-fledged earnings season begins. The main points of interest are the global reciprocal tariff negotiations, the earnings of the U.S. Magnificent 7 (M7), and the earnings of domestic companies.

On the 18th (local time), a trader is working at the New York Stock Exchange in the United States. Photo by AFP

According to the domestic securities industry on the 21st, the Korean stock market is expected to fluctuate around the 3,200-point level on the KOSPI this week. The main variables that will determine the direction of stock prices include: ▲ the progress of the U.S. reciprocal tariff negotiations ▲ the U.S. July Manufacturing Purchasing Managers' Index (PMI) ▲ the European Central Bank (ECB) monetary policy decision meeting ▲ the earnings of the U.S. M7 ▲ and the earnings of domestic companies such as SK Hynix, Hyundai Motor, Hyundai Rotem, and KB Financial Group.

Han Ji-young, a researcher at Kiwoom Securities, said, "The expected weekly KOSPI range is 3,140 to 3,260 points," adding, "Attention will be focused on the earnings of existing leading sectors such as HBM, defense, and banking." Han pointed out, "Last week, SK Hynix plunged due to concerns over intensifying HBM competition next year, ceding leadership to Samsung Electronics," and added, "Given the sharp short-term drop, a technical rebound may occur. Whether these concerns can be alleviated during the conference call will be the key point in determining if SK Hynix can regain leadership."

He added, "Other leading sectors such as defense and banking have also experienced stock price corrections this month, mainly due to short-term valuation burdens," but emphasized, "However, there is a high possibility that the momentum of profit and shareholder returns will be regained through the second-quarter earnings scheduled for later this week. Even if there is volatility in the prices of leading sectors early in the week, it is more appropriate to respond with a 'buy on dips' strategy rather than reducing holdings."

With the U.S.-led reciprocal tariffs set to be fully implemented in August, concerns over tariffs in the market are expected to intensify further. Previously, the three major U.S. stock indices also ended mixed as trade negotiations between the U.S. and the European Union (EU) hit a snag. On the 18th (local time), the Dow Jones Industrial Average closed at 44,342.19, down 142.30 points (0.32%) from the previous session, and the large-cap S&P 500 Index finished at 6,296.79, down 0.57 points (0.01%). The Nasdaq Indexrose 10.01 points (0.05%) to 20,895.66.

Major foreign media reported that U.S. President Donald Trump is demanding at least a 15-20% tariff on all negotiation items from the EU. Maros Sefcovic, the EU Commissioner for Trade, reportedly informed EU ambassadors that negotiations are difficult. Previously, President Trump also announced that starting next month, a 30% tariff would be imposed on all EU imports. While a minimum 15% tariff is lower than this, the market perceives the 30% tariff as a bargaining chip and still finds a 15% tariff burdensome.

Kim Ji-won, a researcher at KB Securities, said, "President Trump is toughening the terms of tariff negotiations with major countries, which has heightened uncertainty again," and added, "This sense of caution will also be reflected in the domestic market." He also said, "Christopher Waller, a member of the Federal Reserve Board, has repeatedly called for a rate cut this month," noting, "Since he is being mentioned as one of the candidates for the next Fed chair, it is necessary to monitor market reactions."

He further stated, "On the 24th, SK Hynix, as well as Tesla and Alphabet?among the M7?are scheduled to announce their earnings for the first time this season, which will draw significant attention."