[Good Morning Market] Iran Negotiation Deadline Nears... Volatility Peaks with Corporate Earnings

KOSPI Expected to Range Between 5,950 and 6,450 Points This Week

"Potential Breakthrough of Previous High on Earnings Optimism"

This week, experts from securities firms have advised that investors should be mindful of increased short-term volatility in the Korean stock market, as the deadline for negotiations between the United States and Iran approaches (scheduled for the morning of the 22nd).

On April 20, Kiwoom Securities stated, "There will be a tug-of-war between two variables: the possibility of war between the United States and Iran, and corporate earnings," setting the expected weekly KOSPI range between 5,950 and 6,450 points.

Last week, the U.S. stock market surged due to the positive news of the reopening of the Strait of Hormuz, but over the weekend, the situation reversed once again. This is because, contrary to the announcement by the Iranian Ministry of Foreign Affairs, the Islamic Revolutionary Guard Corps has insisted on maintaining control over the strait, indicating internal division. Over the weekend, there were reports of attacks on two Indian ships and some vessels turning back, signaling that the Strait of Hormuz has been re-blockaded.

Ji Young Han, a researcher at Kiwoom Securities, predicted, "At the beginning of the week, the stock market will see increased volatility as uncertainty surrounding the negotiations between the United States and Iran coincides with expectations for the earnings season."

He added, "From the middle of the week onwards, the market's focus will shift to the earnings season. In the early phase of earnings reports from leading stocks, there may be a short-term wave of sell-on-news pressure." "However, this is only a temporary exhaustion of market catalysts," "and the outlook for an improvement in overall earnings momentum in the stock market remains unchanged. Taking this into account," "the KOSPI is expected to attempt to break through its previous high in the latter half of the week."

Key variables for the Korean stock market include: ▲ noise from the re-blockade of the Strait of Hormuz ▲ U.S. Senate confirmation hearing for Kevin Warsh, the next Federal Reserve (Fed) Chair ▲ major indicators such as U.S. March retail sales and Korea’s April exports ▲ U.S. corporate earnings from companies such as Tesla and Lam Research ▲ and domestic earnings reports from leading companies such as SK Hynix, Hyundai Motor, and HD Hyundai Heavy Industries.

Meanwhile, as Iran announced it would allow merchant ships to pass through the Strait of Hormuz during the ceasefire, all three major indices in the New York stock market soared at the close on April 17 (local time). At the New York Stock Exchange (NYSE), the Dow Jones Industrial Average ended at 49,447.43, up 868.71 points (1.79%) from the previous session. The S&P 500 Index, focused on large-cap stocks, rose 84.78 points (1.20%) to 7,126.06, while the Nasdaq Composite, centered on technology stocks, climbed 365.78 points (1.52%) to 24,468.48.

Traders are working at the New York Stock Exchange. Photo by Reuters and Yonhap News.

By sector, healthcare, industrials, consumer discretionary, technology, consumer staples, and real estate all jumped more than 1%. Energy fell nearly 3%. The Philadelphia Semiconductor Index rose 2.43%. By individual stock, all the mega-cap technology companies with market capitalizations above 1 trillion dollars gained. On news of the reopening of the Strait of Hormuz, travel and airline stocks rose. Delta Air Lines increased by 2.62%, and United Airlines surged by 7.12%.

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