[Good Morning Market] Optimism for Earnings Season... KOSPI Expected to Start Higher

On April 17, the KOSPI is expected to start higher, as anticipation for the US-Iran ceasefire negotiations and optimism for the earnings season converge.

In the previous session, the Dow Jones Industrial Average in New York closed at 48,578.72, up 115.0 points (0.24%) from the previous day. The S&P 500 finished at 7,041.28, up 18.33 points (0.26%), and the Nasdaq ended at 24,102.70, up 86.69 points (0.36%).

The New York stock market continued to hit all-time highs, driven by positive factors such as easing war risks and expectations for the earnings season. The tech-heavy Nasdaq, in particular, extended its rally for the twelfth consecutive trading day.

U.S. President Donald Trump raised hopes for a ceasefire negotiation, stating, "Iran has agreed not to possess nuclear weapons, and negotiations with Iran could take place as early as this weekend." However, despite the optimism surrounding negotiations, the continued blockade of the Strait of Hormuz remains a burden. Currently, Brent crude is trading at 98 dollars, and West Texas Intermediate (WTI) is around 93 dollars, raising concerns about persistently high oil prices.

Lee Sunghoon, a researcher at Kiwoom Securities, analyzed, "Ultimately, the market will focus on whether the blockade of the Strait of Hormuz will be eased during the ceasefire negotiations, with the expiration of the two-week US-Iran truce approaching on April 22."

With the onset of the earnings season, it is also evident that demand for artificial intelligence (AI) remains robust. TSMC reported a net profit of 572.5 billion Taiwan dollars for the first quarter of this year, exceeding market consensus of 543.3 billion Taiwan dollars and delivering an earnings surprise. Its gross profit margin also reached 66%, the highest in about two decades, and its guidance for next quarter’s revenue was set at a record high of 39 to 40.2 billion dollars. Consequently, the annual revenue growth forecast was also raised to more than 30% year-on-year.

However, following the earnings announcement, profit-taking due to the recent stock price rally led TSMC shares to fall 3.1% on the day. Nevertheless, as major semiconductor companies such as ASML and TSMC continue to emphasize expanding investment in AI infrastructure, market attention is shifting toward the upcoming earnings announcements of major big tech (large IT companies) scheduled for the end of April.

Researcher Lee stated, "Whether major hyperscalers such as Alphabet, Meta, Microsoft, and Amazon will continue to invest in AI will be the key factor determining the future direction of technology stocks."

The domestic stock market closed higher the previous day, supported by eased geopolitical risks following reports of an imminent Israel-Lebanon ceasefire and strong earnings from TSMC. The KOSPI rose by 2.21%, while the KOSDAQ increased by 0.91%.

Today, the domestic market is also expected to remain on an upward trajectory, reflecting optimism for the earnings season. However, with the KOSPI just about 1% away from an all-time high, there is a growing inclination toward short-term profit-taking, raising the possibility of a differentiated trend by sector.

In terms of market flows, foreign investors are playing a significant role. Since the beginning of April, foreigners have been net buyers of approximately 6.4 trillion won in the KOSPI market, driving the index higher. In the semiconductor sector alone, they have net purchased 4.2 trillion won, and they have posted net purchases in 18 out of 26 sectors, including trading companies and distributors, capital goods, machinery, IT home appliances, and chemicals.

Lee further emphasized, "Given that foreign investors were net sellers of about 56 trillion won in total during February and March, there is still ample room for additional buying. The foreign inflow is expected to maintain its buying trend for the foreseeable future."

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