[Good Morning Market] "A Week Full of Events... Attempt to Surpass 4,000 Points"

"Market Direction to Be Reset Starting Next Week After Major Events"

This week, with major events such as the US Federal Open Market Committee (FOMC) meeting, the Asia-Pacific Economic Cooperation (APEC) Summit, and key corporate earnings announcements both domestically and internationally, attention is focused on whether the KOSPI will surpass the 4,000-point mark. In the securities industry, analysts predict that the direction of the Korean stock market will be fundamentally reset starting next week, after these events have been digested.

On the 27th, Kiwoom Securities forecasted that the KOSPI would fluctuate within the range of 3,850 to 4,050 points this week. Lee Sunghoon, a researcher at Kiwoom Securities, stated, "Given the sequential occurrence of major events, we should be mindful that daily price volatility could be greater than last week."

On the 24th, the closing price of the KOSPI was displayed at the Korea Exchange PR Center in Yeouido, Yeongdeungpo-gu, Seoul. Photo by Yonhap News

From a macroeconomic perspective, the key focus of this October's FOMC meeting is whether the US Federal Reserve will decide to cut interest rates. Cho Joonki, a researcher at SK Securities, said, "Since last month’s US Consumer Price Index (CPI) increase came in below market expectations, a 25 basis point (1bp = 0.01 percentage point) rate cut is now certain." He added, "Additionally, Europe, Japan, and Canada also have monetary policy meetings and interest rate decisions scheduled. The market expects Europe and Japan to hold rates steady, while Canada is expected to cut rates by 25 basis points."

On the political front, the outcomes of bilateral meetings between the leaders of the United States, China, Korea, and other countries during the APEC Summit are expected to have a significant impact on the stock market and exchange rates throughout the week. Researcher Lee noted, "The US-China summit is directly linked to whether trade tensions, which have caused volatility in the stock market, will be resolved." He added, "Korea is also scheduled to hold a summit with the United States on the 29th, with tariff negotiations being a key issue."

Corporate earnings announcements from leading companies are also a crucial factor. In the United States, earnings reports from major big tech companies such as Microsoft, Alphabet, Meta, Apple, and Amazon will be released in succession. As concerns about profitability and bubbles coexist regarding artificial intelligence (AI) stocks, the key point of interest will be how well these companies meet the heightened market expectations. In Korea, major companies such as SK Hynix, Doosan Enerbility, Samsung Biologics, Hyundai Motor Company, and LG Energy Solution are also scheduled to announce their earnings.

However, researcher Lee pointed out, "The backdrop to the KOSPI’s record-breaking surge of over 16% this month includes the fact that expectations for third-quarter earnings in leading sectors have already been priced in." He continued, "Given the characteristics of the domestic stock market, there has also been a tendency for some short-term selling after actual earnings are announced." He emphasized, "Achieving the 'Sacheonpi' (KOSPI 4,000 points) is a matter of when, not if. However, since these major events must be digested together, the actual direction of the stock market will be reset starting next week."

Meanwhile, on the 24th (local time), all three major indices on the New York Stock Exchange closed at record highs. This was due to increased expectations for a rate cut after the CPI increase announced that day came in below expectations. On that day, the Dow Jones Industrial Average closed at 47,207.12, up 472.51 points (1.01%) from the previous session. The S&P 500 Index ended at 6,791.69, up 53.25 points (0.79%), while the tech-heavy Nasdaq Composite closed at 23,204.87, up 263.07 points (1.15%).

Expectations have risen that the Fed will cut rates at both of its remaining meetings this year. According to the CME FedWatch tool, the probability of a rate cut in December surged from 91% before the report was released to 98.5%, and the probability of a rate cut next week remained above 95%.