KOSPI would break 4,000 if it rises 1.48%... Diplomatic and earnings events draw attention [Preview of today's market]

The KOSPI is approaching the 4,000-point mark, and expectations are rising. After major U.S. indices closed at record highs recently, attention is growing on whether the upward trend can continue on the back of heavyweight diplomatic events such as the South Korea-U.S. (29th) and U.S.-China (30th) summits. Experts expect market volatility to increase as a U.S. rate cut, the earnings season, and diplomatic events take place toward the end of the month.

According to the Korea Exchange on the 27th, the KOSPI index closed at 3941.59 on the 24th, up 2.49%, marking the first time in history it surpassed the 3,900 level. Analysts say signs of easing in U.S.-China trade tensions and Intel's strong third-quarter results encouraged risk asset appetite.

Investor focus is expected to turn immediately to the U.S.-China summit. President Donald Trump will arrive in Gyeongju on the 29th and will meet with the leaders of South Korea and China in succession during a one-night, two-day schedule. Attention is on whether the Korea-U.S. summit will lead to a final agreement on the trade deal both countries are negotiating. The cash investment ratio and the funding supply period of the $350 billion (about 500 trillion won) investment package to the U.S. are cited as last-minute points of contention. Also in focus is how the meeting between President Trump and Chinese President Xi Jinping will proceed. The two countries have been in conflict over trade issues, rare earths, and tariffs.

A U.S. rate cut in October is seen as a factor that could lift indices. The Federal Open Market Committee (FOMC), which sets the U.S. benchmark interest rate for October, is also scheduled to meet on the 29th. Brokerages are leaning toward the view that the U.S. will cut rates one more time. Attention is also focused on whether the third-quarter earnings season can drive the index. Big tech companies such as Microsoft, Alphabet, and Meta will report results on the 29th, and Amazon and Apple on the 30th.

U.S. indices have shown strength recently. On the 24th in U.S. trading, the Dow Jones Industrial Average finished at 47,207.12, up 1.01%. The S&P 500 was up 0.79%, and the Nasdaq Composite rose 1.15%, with all three major indices closing at record highs. According to the CME's FedWatch, the interest rate futures market priced in a 97% probability that the FOMC will lower the benchmark rate by 0.25% percentage points to 3.75∼4.00%.

Han Ji-young, a researcher at Kiwoom Securities, said, "From this week, major markets including Korea and the U.S. will have to sequentially digest major large events such as the FOMC, the APEC meeting, and the earnings season, so the degree of daily sharp ups and downs in stock prices could expand compared to last week," adding, "However, considering that after October the KOSPI staged an unprecedented surge of over 16% that preemptively factored in earnings expectations, short-term selling could appear after earnings announcements."

Reporter Jo Ara rrang123@hankyung.com