The schedule investors are watching most closely this week (the 8th–12th) is by far the benchmark interest rate the U.S. Federal Reserve Board will decide. If the rate is cut further as the market expects, the stock market's recent rally on hopes of expanded liquidity is likely to continue. If, contrary to expectations, there is no rate cut, the market could take a considerable hit.
Attention is also on what message the Fed will deliver regarding next year's monetary policy direction. As debate over an artificial intelligence (AI) bubble takes a breather, global IT companies such as Oracle and Broadcom will report earnings. Also, with the National Assembly holding a plenary session this week, the government's stock-boosting policies could draw fresh attention. The ruling party said it would pass 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–5th), risk appetite appeared to return. 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 added momentum to the index's rise.
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 shopping season of the year continuing this week, expectations for a "Santa rally" are likely to persist.
The first thing to check is whether U.S. rate cuts will materialize. The FOMC's rate decision will be announced at dawn on the 11th, Korea time. According to FedWatch, a research service 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 already reflects to some extent the possibility of additional rate cuts in April and July next year," adding, "If the Fed holds rates citing 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 cuts. The room for an overly negative interpretation is limited."
Earnings from U.S. corporations also warrant attention. Focus is especially on IT companies' results. That is because their earnings will show whether the AI bubble debate will reignite or fade beneath the surface. Oracle and Adobe report on the 11th, and Broadcom on the 12th.
Jeong Hae-chang, an analyst at Daishin Securities Co., said, "Oracle and Broadcom are corporations at the center of the paradigm shift toward Google's TPU (tensor processing unit), which has emerged as a challenger to Nvidia's GPU (graphics processing unit), amid risks of overinvestment by AI corporations," adding, "Beyond earnings, their business outlooks and guidance deserve close attention."
This week, advice is also emerging to watch robots, automobiles, and machinery alongside the semiconductor sector. Recently, as the Donald Trump U.S. administration expressed its intent to foster the robotics industry, the robotics and automobile sectors strengthened.
Hwang Jun-ho, an analyst at Sangsangin Investment & Securities, said, "If expectations for investment by the Trump administration draw attention not only to robots but also to automobiles and machinery, it could serve as an additional driver for the market's rise," adding, "With a shortage in memory chip supply, the index's upward trend could continue centered on the semiconductor sector."