As domestic and foreign companies continue to announce their second quarter earnings, the KOSPI is expected to remain flat for the time being. The market is paying attention to big events such as the Federal Open Market Committee (FOMC) regular meeting in July and the end of the suspension of the US debt ceiling.
According to the Korea Exchange on the 26th, the KOSPI closed at 3254.42 last week, down 0.69% from the previous week. The KOSPI, which had fallen for three consecutive trading days from the 19th, partially recovered from the decline from the 22nd as investment sentiment contracted due to the spread of Corona 19 delta mutations at home and abroad.
The KOSPI is expected to continue to rise and fall within the boxed range for a while. The expected range of the stock market KOSPI this week is 3200-3320.
The stock market is supported by companies' positive 2Q earnings expectations, but uncertainties due to the deterioration of US economic indicators and the spread of the corona virus remain.
Major events such as the FOMC meeting of the US Federal Reserve (Fed) are raising volatility in the stock market.
Earlier, the Fed started discussing tapering (reducing asset purchases) in earnest. It is expected that opinions on the timing and method of tapering will be presented at this meeting. However, the Fed's concerns are expected to deepen, given the recent increase in uncertainty due to the spread of delta mutations and the ECB's move in July, which hinted at a prolonged low interest rate stance.
Park Soo-jin, a researcher at Mirae Asset Securities, said, "There is a possibility that the tapering issue will be delayed as the delta mutant virus spreads amid the observation that the Fed will materialize its tapering plan at this FOMC."
"Considering the ECB's move, the temptation to delay the tapering discussion has grown," said Na Jung-hyuk, a researcher at Hana Financial Investment. There is no good reason to persuade the members who are starting to show a tendency.”
Whether the US federal government will negotiate a debt ceiling is also a concern. The grace period for the upgrade is the 31st. The U.S. Congress has set a statutory limit of $28.5 trillion based on the fiscal health of the government, and the current U.S. fiscal debt has reached that point. If Congress doesn't approve an increase or a moratorium on the debt ceiling, the US government will default on its debt payments.
Han Dae-hoon, a researcher at SK Securities, said, "It is very burdensome because Dow Jones, an American financial information company, has warned that if the debt limit is not raised, there will be a setback in the financing of the US Treasury in October or November."
The market is also paying attention to the meeting between US Secretary of State Sherman and Chinese Foreign Minister Wang Yi on the 25th and 26th. The development of friction factors between the two countries, including the trade issue, and the success of the US-China summit are the key points to watch.
A researcher said, "There are many events that are burdensome in terms of macros," and predicted that "the stock market will continue to rise and fall within the boxed range as there are many events that can raise awareness in the end."
It is also noteworthy that major domestic and foreign companies are continuing to announce their second quarter results. The results of not only domestic companies such as SK Hynix, Samsung SDI, and Samsung Electro-Mechanics, but also US big tech companies such as Apple, Microsoft, Amazon, Alphabet, Facebook, and Tesla will be announced this week.
However, there is an analysis that the impact on the index will be negligible as the recent stock price has a strong tendency to not move in relation to earnings.
Kim Young-hwan, a researcher at NH Investment & Securities, said, "The operating profit peaks of the economically sensitive stocks, which have led to improvement in Korean corporate earnings, are in the second and third quarters, due to concerns that corporate profits will fall in the long run." Whether this long-term upward trend is expected will be important to the share price."
He advises that securities firms need to respond selectively to stocks with excellent long-term earnings prospects.
Researcher Kim Young-hwan said, "It is difficult for the stock market to have a clear direction as there is controversy over the direction of the global economy, starting with the United States. It is important to select stocks where themes can be formed,” he emphasized.