Market Pauses Near 5,000-Point KOSPI Level... FOMC Remarks and Policy Momentum in Focus [Weekly Market Outlook]

[Financial News] Volatility in the Korea Composite Stock Price Index (KOSPI) is expected to increase this week. Analysts say the market is entering a phase of digesting recent sharp gains, while the outcome of the Federal Open Market Committee (FOMC) meeting and the durability of policy momentum will be the key factors determining the market’s direction. The projected KOSPI trading band has been suggested at 4,800 to 5,100 points.
According to the Korea Exchange (KRX) on the 25th, the KOSPI rose 3.08% last week (January 16–23), climbing from 4,840.74 to 4,990.07 and moving close to the 5,000-point mark. Over the same period, the KOSDAQ Index advanced from 954.59 to 993.93, up 4.12%, extending its upward trend. Gains were led mainly by large-cap stocks such as autos and utilities, which drove the indices higher.
However, many in the securities industry believe a period of consolidation is inevitable this week after the index’s rapid short-term rise. Jung Hae-chang, a researcher at Daishin Securities, said, "After the KOSPI reached the 5,000-point level, it has entered a breather phase to digest supply from profit-taking," adding, "With the fourth-quarter earnings season overlapping with the steep rally so far, profit-taking in sectors that have surged and rotational buying into previously neglected sectors could proceed at an even faster pace."
This week’s Federal Open Market Committee (FOMC) decision is also cited as a factor that could heighten market volatility. While a hold on the policy rate is widely expected, observers note that expectations for rate cuts could shift depending on how strongly Federal Reserve Chair Powell speaks about inflation and employment. Na Jeong-hwan, a researcher at NH Investment & Securities, noted, "The scope for additional rate cuts before Powell’s term ends appears limited," and explained, "However, leading candidates to succeed him are generally viewed as favorable toward rate cuts, though to varying degrees of dovishness, so expectations for easing could expand once the new Fed chair is announced."
Brokerages still see policy momentum and rotational trading as intact. With the KOSPI’s move to the 5,000-point level fueling expectations for further market-boosting policies, some also point to the possibility that investor appetite could spread from large caps to small and mid caps and to the KOSDAQ. Although a phase of heightened short-term volatility is anticipated, the dominant view is that the medium-term upward trend will remain in place.
koreanbae@fnnews.com Bae Han-geul Reporter