The Kospi Index rose by over 1% on Friday as a sense of calm emerged ahead of the upcoming US nonfarm payroll (NFP) data. It rose to 6,663 points even as its top companies, like Samsung Electronics and SK Hynix, rose modestly. Still, the index remains under intense pressure as the deleveraging continues.
Kospi Index rises as calm intensifies
The Kospi Index joined other global indices in a rebound as Samsung Electronics and SK Hynix rebounded. Samsung jumped by 1.80%, while SK Hynix soared by over 2.76%.
SK Square, which has a large stake in SK Hynix, jumped by over 3.26%, while Samsung Electro-Mechanics, which makes multilayer ceramic capacitors (MLCC), camera modules, and semiconductor package substrates, was also up by over 2%.
AI stocks jumped after OpenAI launched Astra, its most advanced model. They also rose after the strong earnings from companies like Dell and HP Enterprise.
On the other hand, top Kospi Index constituents like Hyundai Motor Company, LG Energy Solutions, Samsung Biologics, and KB Financial Group were in the red today.
The ongoing performance came after a period of calm, with the US and Iran avoiding any escalations overnight. The US did not retaliate against Iran, which hit some major targets in Kuwait on Thursday. These events have stabilized crude oil prices, with Brent and the West Texas Intermediate (WTI) rising to $96 and $92.
Meanwhile, South Korea’s bond yields stabilized a bit, with the ten-year yield falling to 4.35% and the 30-year moving to 4.634%. The two yields have pulled back modestly from their highest levels this week. This happened even as the country proposed a $597 billion budget for the year, helped by a 40% surge in tax collections because of AI.
As part of its long-term strategy, the government has established a Future Response Fund that will channel 162.3 trillion ($120 billion) that will make long-term investments.
The same is happening with the South Korean won, which has soared in the past few months, partly because of the recent central bank interest rate hike. Data shows that the USD/KRW pair dropped to 1,355, its lowest level since June last year. It has dropped by over 13% from its highest point this year.
Kospi Index technical analysis
Kospi Index chart | Source: TradingView
The daily chart shows that the Kospi Index has remained inside a narrow range in the past few days. It has formed a symmetrical triangle pattern whose two lines are about to converge. In most cases, big moves happen when this convergence is about to happen.
The index has dropped below the 100-day Exponential Moving Average (EMA), a sign that bears remain in some control. Also, the Percentage Price Oscillator (PPO) has remained below the zero line.
Therefore, the most likely scenario is where the index remains in this range and then makes a big move afterwards.
A move below the lower side of the triangle will raise the possibility of it falling to 6,000. This is possible as South Koreans continue their deleveraging. On the other hand, a jump above the upper side will point to further gains.
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