[Good Morning Market] "War and Interest Rates Cause Volatility... Semiconductors Set the Direction"

"KOSPI Expected Range: 5,500-6,000 Points"
Middle East War and Interest Rate Path: Key Drivers of Market Volatility
Advice: "Avoid Overreacting"

This week, the domestic stock market is expected to remain volatile, influenced by the outlook for U.S. interest rates, news related to the U.S.-Iran war, and changes in semiconductor earnings forecasts.

On the 23rd, Kiwoom Securities stated, "As there are no unique domestic events this week, stock price sensitivity to external variables such as war and macroeconomic conditions should be heightened," and projected the weekly KOSPI range to be between 5,500 and 6,000 points.

"Maintain Focus Amid Geopolitical and Macroeconomic Uncertainty"

On the 20th, the current status of the domestic stock market was displayed on the electronic board in the dealing room at the headquarters of Hana Bank in Jung-gu, Seoul. Photo by Jinhyung Kang

Recently, global stock markets have fluctuated rapidly depending on developments in the U.S.-Iran war. On the 20th (local time), the New York stock market declined across the board following reports that U.S. President Donald Trump was considering the deployment of ground troops. The Dow Jones Industrial Average closed at 45,577.47, down 443.96 points (0.96%) from the previous session. The S&P 500 dropped 1.51% to 6,506.48, and the Nasdaq fell 2.01% to 21,647.61.

The risks associated with war are not limited to geopolitical factors but also impact currency and interest rate policy paths. There is growing market pressure as some predict that the Federal Reserve's first interest rate cut, previously expected in June of this year, could be delayed to September of next year.

Ji-Young Han, a researcher at Kiwoom Securities, stated, "If the yield on the U.S. 10-year Treasury continues to rise, the discount rate burden across global equity markets could increase." She added, "There are growing technical concerns about a long-term trend reversal in the New York stock market, as it has fallen below the 200-day moving average for the first time since early March last year."

"Position Holding and Staggered Buying During Dips Remain Effective"

For domestic stock investors, rather than reacting emotionally to war news, it is advisable to observe the market or implement a staggered buying strategy during sharp downturns. Han advised that this approach remains effective. She said, "The KOSPI has been outperforming compared to the U.S. market. In terms of earnings and valuation (the stock price relative to corporate value), the downside rigidity is also relatively high."

The key upside driver is semiconductors. With expectations for the memory sector remaining positive after earnings were announced by U.S. semiconductor company Micron, whether operating profit consensus (the market average forecast) for domestic companies such as Samsung Electronics and SK hynix will be revised upward has emerged as a crucial factor. In fact, the operating profit forecasts for these two companies for this year have been raised by 8.0% and 5.1%, respectively, over the past month.

The resulting direction of foreign capital flows is seen as the key to breaking through the upper end of the index. Han emphasized, "In terms of supply and demand, this could be a catalyst to improve the conditions for foreign investors, who executed aggressive net selling of about 11 trillion won in the semiconductor sector this month. It is reasonable to assign it high importance."

This content was produced with the assistance of AI translation services.