The event investors are most focused on this week (the 8th to the 12th) is by far the benchmark interest rate the U.S. Federal Reserve will decide. If the benchmark rate is cut further as the market expects, the recent rally driven by liquidity hopes is expected to continue. If, contrary to expectations, rates are not cut, the market could feel a considerable shock.
There is also interest in what message the Fed will deliver regarding next year's monetary policy direction. As the artificial intelligence (AI) bubble debate shows a brief lull, global IT companies such as Oracle and Broadcom will report earnings. With the National Assembly holding a plenary session this week, the government's stock market support policy could draw fresh attention. The ruling party said it would handle the third Commercial Act amendment, which would mandate the retirement of treasury shares, within the year.
In the domestic stock market last week (the 1st to the 5th), risk-on sentiment reemerged. The KOSPI, which opened at 3,967 points on the 1st, climbed back to 4,100 points on the 5th. As foreigners resumed net buying of domestic stocks, institutions also helped lift the index.
The KOSDAQ also rose. As expectations grew that the government would announce measures to revitalize the KOSDAQ market, investment funds flowed in. With the peak consumption season of the year under way this week, expectations for a "Santa rally" are likely to continue.
The first thing to check is whether U.S. rate cuts will materialize. The FOMC's rate decision will be released at dawn on the 11th Korea time. According to FedWatch, a research unit of the Chicago Mercantile Exchange, the probability of a December rate cut is 90%.
Na Jeong-hwan, an analyst at NH Investment & Securities, said, "The current market level has partly priced in the possibility of additional rate cuts in April and July next year," adding, "If the Fed keeps the benchmark rate unchanged on grounds of insufficient data, a short-term price correction would be unavoidable, but given the recent slowdown in inflation and employment indicators, it can be interpreted as merely a delay in the timing of rate cuts. There is limited room for an overly negative interpretation."
Earnings reports by U.S. corporations also deserve attention. Focus is especially on IT companies' results. That is because their earnings will show whether the AI bubble debate will reignite or sink below the surface. Oracle and Adobe report on the 11th, followed by Broadcom on the 12th.
Jeong Hae-chang, an analyst at Daishin Securities Co., said, "Oracle and Broadcom are corporations at the center of a paradigm shift driven by the risk of overinvestment by recent AI corporations and by Google's TPU (tensor processing unit), which has emerged as a rival to Nvidia's GPU (graphics processing unit)," adding, "Beyond earnings, their business outlooks and guidance warrant close attention."
Alongside semiconductors, there are also recommendations to focus on robots, automobiles and machinery this week. As the Donald Trump administration expressed its intention to foster the robotics industry recently, the robotics and automobile sectors gained strength.
Hwang Jun-ho, an analyst at Sangsangin Investment & Securities, said, "If the Trump administration's investment expectations draw attention not only to robots but also to automobiles and machinery, it could serve as an additional driver for the market," adding, "With a shortage in memory chip supply, the index's upward trend could continue led by the semiconductor sector."