Korea Investment Securities warned that following the collapse of the second round of peace talks between the United States and Iran, global stock markets may exhibit unexpected directions. However, the firm analyzed that investors' primary concerns are rapidly shifting away from geopolitical risks in the Middle East region toward other core elements. Researcher Kim Dae-jun noted in the firm's latest report that when examining recent market trends, tensions originating from the Middle East, particularly adverse conditions such as the closure of straits, have already been largely reflected in asset prices and investor sentiment. While this does not mean that geopolitical shocks have completely disappeared, it signifies that attention is now more focused on new drivers for the market after the risk itself rather than the risk factor. Emphasizing that interest rate direction, economic growth, and actual corporate earnings often determine market direction more than war-related news, Kim stated that it is time for investors to concentrate more on fundamental fundamentals.
The most important events currently attracting market participants' attention are the Federal Open Market Committee (FOMC) meeting scheduled for the 29th and the U.S. quarterly Gross Domestic Product (GDP) growth rate to be released the following day. The FOMC is a key meeting that determines the direction of the U.S. benchmark interest rate and acts as a variable with a massive impact on the global financial market in general. If growth rate indicators are also released alongside this, it will become possible to gauge whether the U.S. economy is slowing down more than expected or remaining robust. If expectations of easing interest rate burdens and relief regarding economic trends are confirmed simultaneously, there is a very high possibility that the recently subdued investor sentiment will revive. If the two key indicators move in a positive direction, it will become an important turning point where market direction can be confidently anticipated.
Corporate earnings released during the same period are also expected to be a critical dividing line for the market. Alphabet, Microsoft, Amazon.com, Meta Platforms, Apple, and other major U.S. big tech companies will follow each other in disclosing their earnings after the market closes on the 29th and 30th. These companies hold a very large weight within the U.S. stock market and serve as indicators that comprehensively reflect artificial intelligence, cloud services, digital advertising, and consumer trends, underscoring their importance. Researcher Kim Dae-jun predicted that if macroeconomic anxieties somewhat subside and big tech company earnings also turn out favorably, the speed of investor sentiment recovery will accelerate further. The analysis suggests that if earnings back up the technology-led growth trend, the upward momentum of the market can become more solid.
It is expected that this global trend will have a significant impact on the domestic stock market as well. Recently, the correlation between the KOSPI and the U.S. Nasdaq has been increasing again, so improvements in U.S. technology stock earnings are likely to work favorably for the domestic KOSPI, which has a high proportion of semiconductor and information technology stocks. Researcher Kim analyzed that semiconductor and machinery sectors, particularly nuclear power and power-related stocks, are likely to continue leading the trend. At the same time, he advised paying close attention to alternative value chains for existing energy sources, as high oil prices may persist due to the impact of the war in the Middle East. Specifically, secondary battery businesses in the home appliance sector and renewable energy-related businesses in the energy sector were mentioned; given that recent earnings show signs of profit turnaround after hitting the bottom, it is deemed worthwhile to consider expanding their weight within portfolios. Ultimately, under the premise that geopolitical instability does not escalate further, it suggests that the market's central axis is likely to shift back from news shocks to the original fundamental factors of interest rates, growth, and earnings.