Kospi Index jumped by over 1% on Monday morning as top stocks like SK Hynix and Samsung Electronics jumped despite the rising hostilities in the Middle East. It jumped to 7,000 points, up by 33% from its lowest level in August.
Samsung Electronics and SK Hynix stocks lead gains
The Kospi Index rally coincided with the ongoing performance of other global indices. In the United States, futures tied to the Dow Jones rose by 130 points, while those linked to the S&P 500 jumped by 21 points. European futures were also in the green.
The rally happened as stocks like Samsung Electronics and SK Hynix, which account for close to 50% of the index, rose. Samsung jumped by over 4%, while SK Hynix rose by over 1.13%. SK Square, which has a big stake in SK Hynix, jumped by close to 5%.
Other large companies in the Kospi Index were also in the green. This includes firms like KB Financial, Samsung C&T, and Samsung Life Insurance.
These stocks rose as traders waited for the upcoming meetings between President Donald Trump and Xi Jinping in Washington. The two leaders will discuss several important things, including trade, artificial intelligence, and US-China relations. They will also talk about the ongoing US-Iran war, which Trump started and has failed to stop it.
The Kospi Index rally also coincided with the falling crude oil prices. Brent, the global benchmark, dropped by 2% to $101, while the West Texas Intermediate (WTI) dropped by 2% to $94.
Oil is dropping despite the rising issues in the Middle East. Trump told Fox News that he was considering his options on Iran. One of these would be to intensify his attacks and wipe out the country. Another would be to negotiate with its top leaders. He told Fox News that he will be prepared to meet with Iran’s president when he visits New York this year,
There are substantial risks in the oil market, including the escalating situation between Saudi Arabia and Houthis. Ansar Allah launched a major attack against key Saudi targets, including near a major airport in Riyadh. An escalation in the Middle East would lead to higher oil prices for longer than expected.
There is also a risk that Iran will launch a major attack against US targets, including aircraft carriers, as it seeks to influence the upcoming election.
Kospi Index technical analysis
Kospi Index chart | Source: TradingView
The daily chart shows that the Kospi Composite has staged a comeback in the past two months, moving from a low of 5,251 in July to 7,000 today. This rebound has now seen it jump above the 50-day Exponential Moving Average (EMA) and the Supertrend indicator.
At the same time, the Relative Strength Index (RSI) and the MACD indicators have continued rising in the past few months. However, the risk, is that it has formed a rising wedge pattern, which is made up of two ascending and converging trendlines.
Therefore, the index may jump to the upper side of the wedge at 7,200 and then retreat in the coming weeks. If this happens, it may drop to the support level of 6,000.
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