[Good Morning Market] "Korea-US Tariff Talks and Earnings Season... Volatility Up"

This week, the KOSPI is expected to experience a volatile market. As second-quarter earnings are being announced, factors such as the Korea-US mutual tariff negotiations are likely to have an impact.

Reuters Yonhap News

According to the securities industry on July 28, the KOSPI is projected to fluctuate around the 3,200 level this week. The main factors influencing the index include: ▲ Korea-US mutual tariff negotiations ▲ the US Federal Open Market Committee (FOMC) ▲ earnings announcements from Korean and US companies.

The securities industry anticipates that the tariff rates themselves will have a greater impact than the conclusion of the Korea-US mutual tariff negotiations. Han Ji-young, a researcher at Kiwoom Securities, stated, "The key issue in the Korea-US negotiations is not whether an agreement is reached, but rather the extent of the mutual tariff reductions and whether automobile tariffs will be lowered," adding, "Depending on the outcome, not only the automobile sector, which is a representative victim of tariffs, but also the overall downward rigidity of the index could change."

However, if the tariff rate is set at 15%, the same as Japan and Europe, it is expected that uncertainty will be resolved. Kim Hojung, a researcher at Yuanta Securities, emphasized, "Although uncertainty remains in trade negotiations with the US, the differentiation in tariff rates compared to other major US trading partners will not be significant," and added, "If Korea can also secure the 15% tariff rate that Japan agreed to with the US, the margin reduction for export companies will be minimized, and together with the gradual recovery in global manufacturing demand, a recovery in the export cycle can be expected."

In addition, earnings announcements from major companies in Korea and the US are also expected to have an impact. In the US, companies such as Microsoft, Apple, Amazon, and Meta are scheduled to announce their results, while in Korea, Samsung Electronics and others will be in focus. Cho Junki, a researcher at SK Securities, advised, "With the US big tech earnings announcements, there will also be many earnings reports from Samsung Electronics as well as shipbuilding and defense companies in the domestic market," and cautioned, "Volatility may be higher than usual, both upward and downward."

Meanwhile, all three major indices of the New York Stock Exchange closed higher. On July 25 (local time), the Dow Jones Industrial Average finished at 44,901.92, up 208.01 points (0.47%) from the previous session. The S&P 500, which focuses on large-cap stocks, closed at 6,388.64, up 25.29 points (0.40%) from the previous session. The tech-heavy Nasdaq also rose 50.36 points (0.24%) to finish at 21,108.32.