[Market ING] KOSPI Attempts to Recover 3,200 Mark; Focus on Korea-U.S. Summit and Nvidia Earnings

Major Events This Week Could Heighten Market Volatility
Korea-U.S. Summit and Nvidia Earnings to Set Direction for Leading Stocks
Policy Uncertainties and U.S. Inflation Data Remain Key Variables

With the KOSPI having fallen back below the 3,200 mark last week, several major events are scheduled for this week that could impact the stock market, raising the possibility of increased volatility.

Yonhap News Agency

Last week, the KOSPI declined by 1.76%, while the KOSDAQ dropped by 4.02%. Na Jeonghwan, a researcher at NH Investment & Securities, explained, "Profit-taking occurred due to caution ahead of Federal Reserve Chair Jerome Powell's speech at Jackson Hole, leading to a drop in stock prices. Concerns about an artificial intelligence (AI) bubble, especially in the United States, also negatively affected the market. In Korea, the decline was more pronounced due to ongoing uncertainties surrounding tax reforms, such as the major shareholder capital gains tax threshold."

With Chair Powell signaling a potential rate cut, market concerns are expected to ease somewhat. On August 22 (local time), Powell stated at the annual Jackson Hole Economic Policy Symposium in Wyoming, "Policy remains in restrictive territory, and as the baseline outlook and risk balance change, we may need to adjust our policy stance. We can proceed cautiously, considering changes in our policy stance based on the stability of the unemployment rate and other labor market indicators." This suggests that the Fed, which has so far focused on curbing inflation, may shift its policy stance to place greater emphasis on the risk of a slowdown in employment, effectively leaving the door open for a possible rate cut in September.

There are expectations that volatility in the stock market could increase due to major events such as the Korea-U.S. summit and Nvidia's earnings report. Kim Jiweon, a researcher at KB Securities, said, "Momentum from domestic policy related to the Korea-U.S. summit is expected to influence the market early in the week," adding, "Later in the week, major issues such as Nvidia's earnings, the Bank of Korea's Monetary Policy Board meeting, and U.S. inflation indicators are lined up, so it is necessary to prepare for increased market volatility." She also noted, "Fluctuations are likely to continue at the current index level for the time being."

In particular, it is expected that the direction of leading stocks, which wavered last week, will be determined by the Korea-U.S. summit and Nvidia's earnings. Lee Kyungmin, a researcher at Daishin Securities, stated, "On the 25th, a summit between President Lee Jaemyung and U.S. President Donald Trump is scheduled. Follow-up discussions on tariff negotiations are expected to include the MASGA project, nuclear power generation, and LNG projects, among other industrial cooperation topics. Related sectors, which experienced significant volatility last week, are likely to see their short-term stock price direction determined by the outcome of the summit discussions."

Nvidia's earnings are expected to impact technology stocks. Lee added, "Although expectations for technology stocks have weakened recently due to the AI bubble controversy, Nvidia's earnings announcement and guidance on the 28th should help reaffirm confidence in growth momentum. However, given the recent concerns about an AI bubble, the market may react sensitively even to minor shortcomings in indicators such as profit margin changes, so caution is warranted."

Attention is also focused on whether domestic policy momentum will recover. Na pointed out, "This week is filled with numerous uncertain events, including a scheduled vote on the second amendment to the Commercial Act at the National Assembly plenary session on the 25th, and the government may soon announce its policy on major shareholder capital gains tax. After policy uncertainties are resolved, policy momentum could recover." NH Investment & Securities forecasted the KOSPI's expected range for this week to be between 3,000 and 3,280.

Key events this week include the Korea-U.S. summit on the 25th. On the 26th, the U.S. will release data on new durable goods orders for July, the Richmond Fed Manufacturing Index for August, and the Conference Board Consumer Confidence Index for August. On the 28th, the Bank of Korea's Monetary Policy Board meeting is scheduled, and Nvidia will announce its second-quarter earnings. On the 29th, the U.S. will release the Personal Consumption Expenditures (PCE) Price Index for July.

Lee commented, "The headline PCE inflation rate for July is expected to be 2.6%, similar to the previous month, and the core PCE is forecast to rise slightly to 2.9% from 2.8% in the previous month. If the inflation indicators meet expectations, uncertainties could be resolved. Even if inflation slightly exceeds expectations, the outlook for a U.S. economic slowdown and the medium- to long-term direction of monetary policy remain valid. Since the focus of current monetary policy has shifted toward employment, the impact is expected to be limited ahead of the early September employment indicators."