[Good Morning Stock Market] FOMC, Big Tech Earnings Converge in 'Super Week'... A Volatile Week Ahead

Kiwoom Securities Forecasts Weekly KOSPI at 5,300-5,800
Focus on Semiconductor Earnings Sustainability and Shareholder Returns

South Korea’s stock market is expected to remain volatile this week as it enters a “super week” packed with U.S. monetary policy meetings and earnings announcements from major domestic and international companies.

On October 26, Kiwoom Securities identified this week’s key market drivers as the U.S. Federal Open Market Committee (FOMC) meeting in October, September personal consumption expenditures (PCE) inflation, and earnings announcements from U.S. big tech companies and domestic semiconductor companies. It forecast a weekly KOSPI range of 5,300 to 5,800 points.

Attention Focuses on Fed Chair’s Moves and Big Tech Earnings

“With the FOMC meeting and earnings from leading domestic and international companies coming later this week, investors are likely to engage in active wait-and-see trading,” said Han Ji-young, a researcher at Kiwoom Securities. “The stock market could swing frequently during the day without a clear direction.”

A display board in the dealing room at Hana Bank in Jung-gu, Seoul, shows the domestic stock market on the 23rd. Photo by Kang Jinhyeong.

The most important macroeconomic event is the October FOMC meeting. “At this meeting, the key issue will be the tone of Federal Reserve (Fed) Chair Kevin Warsh’s remarks on the future path of monetary tightening, rather than the rate decision itself,” Han said. “If Chair Warsh maintains a cautious stance toward further tightening, it could ease some of the uncertainty surrounding the rate path.”

For corporate earnings, the key question is whether investments in artificial intelligence (AI) are translating into higher revenue and improved cash generation. In the United States, Amazon, Alphabet and Microsoft (MS) are scheduled to report earnings. For Amazon, investors will focus on growth in its cloud business, Amazon Web Services (AWS), and changes in cash flow resulting from capital expenditures. For Alphabet, the focus will be cloud profitability and the results of using AI in its advertising business. For Microsoft, the key points will be Azure’s growth rate and the pace at which it monetizes AI services.

Will Today’s Semiconductor Boom Continue Beyond Next Year?

In South Korea, earnings announcements and conference calls from Samsung Electronics and SK hynix are seen as key events that could shift market sentiment. In particular, it will be important to determine whether companies can sustain their current high profits beyond 2027-2028. Investors will need to assess demand and price outlooks for high-bandwidth memory (HBM) and conventional DRAM, as well as supply-demand changes resulting from capacity expansion.

Additional shareholder return policies are another factor. Investors will be watching Samsung Electronics’ cash dividends and the scale and structure of its future shareholder returns, as well as whether SK hynix will detail additional shareholder returns after halting its review of a Solidigm listing. “A recovery in confidence in earnings and the clarification of additional shareholder return policies could be turning points in easing concerns over share prices and supply and demand,” Han said.

She added, “Earnings from non-semiconductor companies, including Samsung Electro-Mechanics, Hanwha Aerospace, Hanwha Ocean and Hyundai Motor, are also events that cannot be overlooked. Depending on individual earnings results, there could be differences during the week in the momentum of share price rebounds across sectors and the strength of fund inflows. It would be appropriate to reflect this in investment strategies.”

Meanwhile, U.S. stocks fell across the board on October 23 (local time) as military tensions between the United States and Iran escalated. Investor sentiment weakened as international oil prices surged amid concerns that the war in the Middle East could intensify again. On the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 52,215.16, down 652.82 points, or 1.23%, from the previous trading day. The S&P 500 fell 39.75 points, or 0.52%, to 7,623.68, while the technology-heavy Nasdaq Composite closed at 25,955.34, down 53.52 points, or 0.21%.

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