[Weekly Market Outlook] US Focuses on Additional Rate Hikes Within the Year... Domestic Companies' Earnings Announcements

This week (24th-28th), the U.S. Federal Reserve (Fed) is scheduled to announce its benchmark interest rate decision. Additionally, a large number of major companies are set to release their earnings reports.

According to the financial investment industry on the 23rd, the expected weekly KOSPI range is forecasted to be between 2550 and 2670 points. The strong earnings reports from major U.S. big tech companies and the retreat in recession forecasts are considered upward factors. On the other hand, uncertainty regarding the Fed's monetary policy is a downward factor.

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed) [Image source=Yonhap News]

The upcoming Federal Open Market Committee (FOMC) meeting is scheduled to be announced in the early morning of the 27th Korean time. The market is virtually certain to accept a 0.25 percentage point rate hike. The key issue is whether there will be additional hikes within the year; the Fed is expected to provide a general response along the lines of "the possibility of further rate increases remains open." The market is anticipating a rate freeze this year and rate cuts next year.

Following the release of the U.S. Consumer Price Index (CPI) for June, major global investment banks such as Goldman Sachs, Bank of America, and JP Morgan have consecutively issued analysis reports stating that "the possibility of a recession has decreased." This is interpreted as a high assessment of the possibility of a soft landing for the economy based on recent inflation slowdown. Investment sentiment in the corporate bond market is also considered to be improving.

Meanwhile, the domestic stock market is preparing for major companies' earnings announcements this week. Starting with POSCO Holdings on the 24th, Samsung Biologics on the 25th, SK Hynix on the 26th, and Samsung Electronics (main earnings) and LG Energy Solution on the 27th are scheduled to announce their Q2 earnings.

Kim Young-hwan, a researcher at NH Investment & Securities, said, "In the past two weeks, earnings forecasts for KOSPI companies, centered on semiconductors, have been slightly downgraded for the second half of the year," adding, "In the short term, doubts about the speed of semiconductor earnings rebound may arise."

Lee Hyuk-jin, a researcher at Samsung Securities, advised, "Currently, the KOSPI's valuation burden is easing as earnings estimates are being revised upward," and added, "Since domestic export indicators are also passing the bottom, it is important to use temporary corrections as investment opportunities." He further stated, "As the earnings season has begun, it is necessary to respond with stocks that can exceed expectations in earnings and supply-demand. The leading themes this year are AI and electric vehicles, and in terms of earnings, automobiles and electronic components are likely to show surprises."

Meanwhile, the major scheduled events this week include the announcement of South Korea's preliminary Q2 Gross Domestic Product (GDP) and the International Monetary Fund (IMF) World Economic Outlook on the 25th, the U.S. benchmark interest rate announcement on the 26th, and the European Central Bank (ECB) benchmark interest rate and the U.S. preliminary Q2 GDP announcement on the 27th.

This content was produced with the assistance of AI translation services.