As the "two-week cease-fire" between the United States and Iran ends on the 21st (local time), attention is focused on the course of the war. Hopes had been high that the two countries were close to a peace deal, but uncertainty persists as Iran again moved to reblockade the Strait of Hormuz. In addition, corporate earnings that have driven the domestic stock market are lined up this week. In particular, attention is on whether SK hynix, which is scheduled to release results on the 23rd, can deliver an "earnings surprise."
Although the first round of peace talks between the United States and Iran fell through last week, the domestic stock market rose on expectations for a second round of talks. On the 13th, when the market opened for the first time after news broke that the first peace talks had collapsed, the KOSPI index fell just 0.86%.
Afterward, on the 16th, expectations for peace drove it up to 6,226.05. It was the first time in 33 trading days that the KOSPI closed above the 6,200 level. On the 17th, ahead of the second round of talks between the United States and Iran, the KOSPI index ended the week's transactions slightly lower at 6,191.92.
This week as well, the course of the war appears to warrant close attention. The "two-week cease-fire" between the United States and Iran expires on the 21st (local time). Thus, the second round of peace talks was initially expected to take place before the 21st.
But starting on the 18th (local time), the mood began to shift rapidly. Iran's Islamic Revolutionary Guard Corps (IRGC) said it would close the Strait of Hormuz starting that evening, and Iran's deputy foreign minister also said a date had not been set for the second round of peace talks with the United States.
Ayatollah Seyyed Mojtaba Khamenei, Iran's supreme leader, issued a statement saying, "Just as Iran's drones strike the United States and the Zionist criminals (Israel) like lightning, our valiant navy is also ready to deliver a new bitter defeat to the enemies," sending a hard-line message.
Earlier, U.S. President Donald Trump suggested he could end the cease-fire if no peace deal with Iran is reached by the 22nd. Foreign media also reported that on the weekend of the 18th (local time), Trump convened a Situation Room meeting at the White House to discuss the reblockade of the Strait of Hormuz and Iran's negotiations.
However, resuming war is expected to be a burdensome option for both sides. This has prompted speculation that the cease-fire could be extended.
Lee Sang-jun, a researcher at NH Investment & Securities, said, "President Trump denied it, but because resuming war would be burdensome for both sides, there is also a high possibility the cease-fire will be extended," adding, "Measures similar to the United States closing the Strait of Hormuz after the first talks collapsed could reemerge, but investors are likely to interpret them as leverage for sealing a deal, so we judge the overall market impact will be limited."
In Korea, first-quarter earnings announcements by major corporations are lined up. What especially warrants attention is SK hynix's earnings release scheduled for the 23rd. As Samsung Electronics, which released results earlier, posted a record operating profit, the market expects SK hynix to also deliver an earnings surprise.
Lee Kyung-min, a researcher at Daishin Securities, said, "Whether operating profit exceeds 40 trillion won in the first quarter is the key," explaining, "If SK hynix beats expectations following Samsung Electronics, expectations for stronger KOSPI valuation appeal and momentum will be amplified."
Also pending on the 21st (local time) is the confirmation hearing for Kevin Warsh, the new chair of the Federal Reserve (Fed). The market is on high alert for the nominee's views on monetary policy, including the benchmark interest rate and the Fed's assets.
Yoo Myung-gan, a researcher at Mirae Asset Securities, explained, "At the hearing, nominee Warsh is likely to take a cautious stance, warning about inflation."
Although optimism about peace has expanded, inflation concerns remain because international oil prices are still hovering around the $90 level. In contrast, core consumption is likely to be dampened by uncertainty over the Iran talks and high oil prices.
Meanwhile, attention should also be paid to economic indicators to be released at home and abroad. On the 21st, the United States is scheduled to release the March retail sales index. It is expected to increase by 1.2 percentage points from the previous month, but retail sales excluding the impact of rising energy prices are seen rising only 0.2 percentage points.
The researcher said, "The key is how well real retail sales hold up," adding, "As the Consumer Price Index (CPI) has not shown signs that higher energy prices are spreading to other items, concerns about U.S. stagflation are expected to ease quickly."
Attention should also be paid to Korea's exports for the first 20 days, to be released on the 21st. This is because the correlation between the KOSPI's average daily export value and the KOSPI index is above 0.7.
The researcher explained, "If the average daily exports for the 20 days hit an all-time high, it will add strength to the KOSPI index's upward momentum," adding, "As of the 10th, the growth rate of exports was 36.7%, with both total exports and semiconductor exports hitting an all-time high by export value."