With tensions from the Middle East war easing and SK hynix announcing record results, the KOSPI index surged from 6,200 to 6,500 in a week last week. This week (Apr. 27–30), the U.S. Federal Open Market Committee (FOMC) will decide its benchmark interest rate, and major Big Tech companies are scheduled to report earnings.
Investors are focused on whether the KOSPI index's rally will continue this week. As the United States and Iran continue talks without a cease-fire deadline, the market will watch how the FOMC and earnings from global corporations affect stocks.
Last week, the KOSPI index broke through 6,200, 6,300, and 6,400 points, then topped 6,500 intraday, showing strength. The KOSDAQ index also closed above 1,200 on the 24th for the first time in 25 years since the 2000 "dot-com bubble."
On the 29th (local time) this week, the FOMC will set the benchmark rate. With international oil prices rising after the Middle East war and inflation concerns growing, experts expect rates to be left on hold. Most major investment banks (IB) forecast that the U.S. Federal Reserve (Fed) will resume rate cuts in September this year.
Although a rate hold is the prevailing view, it is necessary to confirm how members of the Federal Reserve Board currently see the economy and inflation.
Ha Geon-hyeong, a researcher at Shinhan Investment & Securities, said, "Employment is recovering moderately while rising energy prices are increasing the expense burden," and noted, "While previously suppressed consumer demand is reviving and keeping inflationary pressure in place, the Fed is maintaining a stance of watching geopolitical risks, so the probability of holding rates at this meeting is high."
Also on the same day, major Big Tech earnings from Alphabet, Meta, and Microsoft are scheduled. Guidance for artificial intelligence (AI) capital expenditures (CAPEX) is the most important indicator, as it affects related industries across semiconductors, power equipment, and energy. Depending on the results, shares of the semiconductor duo leading the domestic market, Samsung Electronics and SK hynix, are also likely to be affected.
Kim Seong-hwan, a researcher at Shinhan Investment & Securities, said, "Looking at the recent U.S. market, it appears to be reacting more to the results of AI-related corporations than to U.S.-Iran end-of-war talks," adding, "As short-covering to close short positions piled in, even some speculative names rose strongly, while software with weak earnings bases and cyclicals showed increased volatility."
In the securities industry, the outlook for further KOSPI gains is positive, reflecting an improvement in the semiconductor cycle. Goldman Sachs raised its 12-month KOSPI target to 8,000 from 7,000, reflecting upward earnings revisions tied to AI-related semiconductor demand.
However, there is also pressure from the recent short-term spike. With both of the semiconductor duo's results out and the KOSPI hitting a record high, profit-taking could trigger a pullback. While market sensitivity to war headlines has diminished, some note the need to be mindful of the potential for heightened volatility from external variables such as rising international oil prices.
Noh Dong-gil, a researcher at Shinhan Investment & Securities, said, "With first-quarter results for Samsung Electronics and SK hynix confirmed, in the short term it is worth seeking opportunities in non-semiconductor sectors where price burdens are relatively lower," adding, "Semiconductors remain at the market's center, but a strategy of finding other sectors that can rise alongside them is also valid."
Although the impact of the U.S.-Iran war on our stock market has diminished, the situation in the Middle East remains an important variable.
U.S. President Donald Trump said he would sink without hesitation any vessel that lays mines in the Strait of Hormuz. In response, Iran is refusing to join talks as long as the U.S. naval blockade continues. As tensions rose, international oil prices again topped $90 a barrel.
Still, there is room for negotiations. With President Trump saying the cease-fire would be extended, Iran also says it will negotiate if the United States lifts the naval blockade. Even amid tension, the possibility of dialogue remains.
Lee Kyung-min, a researcher at Daishin Securities, said, "Recent stock gains reflected expectations for end-of-war talks between the United States and Iran, but as concerns emerged over the weekend that geopolitical risks could flare up again, caution is appearing alongside."