"Is the War Finally Over?" Will KOSPI Head Straight for 10,000?... 'This' Will Decide [Weekend Money]

Next Week's FOMC Decision Holds the Key
Korean Stock Market Sentiment Hinges on U.S. Interest Rate Direction

Kevin Walsh, Chairman of the U.S. Federal Reserve (Fed)

As the end of hostilities between the United States and Iran draws near and the Korean stock market has managed a rebound, analysts say that the results of the upcoming U.S. Federal Open Market Committee (FOMC) meeting will serve as a key variable influencing further gains in the KOSPI next week.

On June 13, Daishin Securities projected that after a substantial peace agreement between the U.S. and Iran, stabilized oil prices will ease inflation concerns, and the resulting decline in bond yields and the U.S. dollar will provide additional upward momentum for global stock markets.

Once the risk of war dissipates, the direction of U.S. interest rates is expected to be the most important factor determining the future trajectory of the Korean stock market. Lee Kyungmin, a researcher at Daishin Securities, stated, "The remaining issue after the end of hostilities will be the results of the June FOMC meeting scheduled for next week. While the FOMC dot plot in March left open the possibility of a single rate cut this year, recent comments from Federal Reserve officials suggest an increased likelihood of a rate hold or even a rate hike this year."

Lee added, "Due to the recent employment surprise and the elevated Consumer Price Index (CPI), the FED Watch currently reflects two rate hikes—one in October this year and one in March next year. While an upward revision of the dot plot is inevitable, if the market is guided toward a rate hold for both this year and next year, it could actually provide a surprise momentum for the market." He went on to say, "Even if the Federal Reserve signals one rate hike each in 2024 and 2025, this may not burden the stock market; rather, it could bring relief that the worst has passed."

He also emphasized, "The content of Kevin Walsh's press conference is also crucial. As this will be his first press conference since being appointed Chairman of the U.S. Federal Reserve, it will reveal his stance on monetary policy." Lee predicted, "Given that he was nominated by President Donald Trump, and that this is his first FOMC meeting and press conference, he is more likely to express a dovish stance rather than a hawkish one."

In particular, he noted, "The more hawkish the dot plot or FOMC statement is, the more dovish Kevin Walsh's press conference is likely to be," stressing that "the outcome of the June FOMC, which many investors are concerned about, could actually serve as a turning point for market sentiment."

Following the FOMC, the market will enter the full-fledged second-quarter pre-earnings season. With Samsung Electronics set to release its earnings guidance in the first week of July, there is an increasing likelihood of upward revisions to earnings forecasts.

Lee stated, "Despite the stagnation in earnings forecasts in June, forward earnings per share (EPS) continued to rise. With the KOSPI's 12-month forward price-to-earnings ratio (PER) currently at just 7.34 times—putting it in deep value territory—upward revisions to earnings forecasts will increase upward pressure on the KOSPI and continue to expand its upside potential."

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