[Market ING] KOSPI Attempts to Recover 7,000 Level Amid FOMC and Earnings Releases

KOSPI Projected Weekly Range: 6,700 to 7,600

The sidecar mechanism has been triggered for 10 consecutive days, driving an unprecedented level of volatility in the market. Attention is focused on this week's Federal Open Market Committee (FOMC) meeting and the earnings announcements from big tech (large information technology companies), with the expectation that the KOSPI will attempt to recover the 7,000 mark.

Yonhap News Agency

Last week, the KOSPI fell by 1.91%, while the KOSDAQ dropped by 5.514%. The trend from the previous week largely continued. At the beginning of the week, the KOSPI managed to recover from an early plunge and briefly reclaimed the 7,000 level, only to fall back below it on the final trading day of the week. Lee Jaewon, a researcher at Yuanta Securities, explained, "The sharp decline in the index in July was mainly driven by elevated expectations, deleveraging of leading stocks, and rebalancing sales from leveraged single-stock exchange-traded funds (ETFs), rather than just a collapse in semiconductor demand. The sidecar mechanism was triggered in every trading session last week, and the sharp drop in the KOSPI on the 24th was primarily due to a surge in oil prices above 100 dollars amid Middle East tensions, as well as a spike in U.S. Treasury yields, which triggered risk aversion among foreign investors."

This week, the market is expected to see renewed volatility as numerous events, including key corporate earnings releases and the FOMC meeting, are scheduled. Lim Jeongeun, a researcher at KB Securities, said, "With SK hynix, Microsoft (MS), and Meta set to announce their earnings this week, growing interest in capital expenditures (CAPEX) and continued semiconductor demand will play a major role in driving sector investment sentiment." She added, "Additionally, the July FOMC is also scheduled, making this a 'super week' where corporate earnings and macroeconomic events coincide."

Similar to Alphabet's earnings release last week, it is expected that the scheduled earnings announcements from big tech companies this week will help ease concerns about a reduction in market investment in artificial intelligence (AI). Lee Sangjun, a researcher at NH Investment & Securities, noted, "Alphabet's second-quarter results helped dispel recent market concerns about AI CAPEX. The outlook for 2026 CAPEX was raised from 180 billion–190 billion dollars to 195 billion–205 billion dollars, and another significant increase is anticipated for 2027." He continued, "Other hyperscaler earnings are expected to highlight the ongoing AI supply shortage, just like Alphabet, and are likely to address worries about reduced AI investment in the market."

The FOMC meeting is also scheduled, with the market currently expecting the policy rate to remain unchanged. Researcher Lee Sangjun stated, "U.S. nonfarm payrolls for June came in significantly below both market expectations and the previous month's figures, and both the headline and core Consumer Price Index (CPI) for June fell back." He also noted, "With Federal Reserve Chair Kevin Warsh taking a stance to reduce forward guidance, it seems unlikely that clear policy signals will be provided for the time being. Even in recent Congressional testimony, Chair Warsh remained silent on rate decisions, and the impact on the market was limited."

As earnings announcements grow in scale, it is anticipated that the KOSPI will gain upward momentum, though rising international oil prices will likely serve as a headwind. Researcher Lee Sangjun said, "As additional hyperscaler earnings confirm continued AI supply shortages and CAPEX expansion, the KOSPI could build further upward momentum. The specific comments on industry outlook, guidance, and shareholder returns in the earnings announcements from SK hynix and Samsung Electronics are also positive factors." He added, "However, the continued military clashes between the U.S. and Iran have increased upward pressure on both international oil prices and domestic interest rates, which requires caution." NH Investment & Securities forecast the KOSPI's predicted range for this week to be between 6,700 and 7,600.

This week’s major events include the release of U.S. June durable goods orders on the 27th and the July Conference Board Consumer Confidence Index on the 28th. On the 30th, the FOMC's decision will be announced alongside the release of the U.S. June Personal Consumption Expenditures (PCE) Price Index and U.S. second-quarter Gross Domestic Product (GDP). On the 31st, China's July National Bureau of Statistics Manufacturing Purchasing Managers’ Index (PMI) will be released, and the Bank of Japan’s (BOJ) Monetary Policy Meeting will be held.

Major corporate earnings will also be announced this week. In the U.S.: on the 28th, Boeing, Bloom Energy, Visa, Coca-Cola, and Ford; on the 29th, Microsoft, Meta, Lam Research, and Qualcomm; and on the 30th, Amazon and Apple will release their results. In Korea: on the 27th, Doosan Enerbility, LG Innotek, Hanwha Ocean, HD Hyundai Marine Solution, and Industrial Bank of Korea; on the 28th, Hanmi Pharm, HYBE, and HD Hyundai Electric; on the 29th, SK hynix, HD Hyundai Heavy Industries, Hanwha Solutions, and Samsung C&T; on the 30th, Samsung Electronics, Samsung Electro-Mechanics, Samsung SDI, POSCO Holdings, and Amorepacific; and on the 31st, Hanwha Aerospace, LG Chem, Ecopro BM, and Hyundai Engineering & Construction will report their second-quarter results.

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