[Weekly Stock Market Forecast] FOMC Rate Pause Expected, Powell's Press Conference Still Uncertain

# South Korean KOSPI Steadies at 2550 Amid Trade Hopes and Strong U.S. Tech Earnings SEOUL—The KOSPI concluded last week maintaining the 2550 level, buoyed by optimism over trade talks and strong earnings reports from major U.S. tech firms. Market sentiment in South Korea this week will be largely influenced by the outcome of the upcoming Federal Open Market Committee (FOMC) meeting. As of May 4, the Korea Exchange reported that the KOSPI closed last week at 2559.79, up 13.49 points or 0.53% from the previous week’s close at 2546.30. # Reduced Concerns over Tariff Policies Lee Kyung-min, a research analyst at Daishin Securities, commented on current market conditions, noting reduced uncertainty around Trump’s tariff policies. "Worries about economic slowdown tied to the tariffs have eased somewhat," he noted, adding that South Korea’s Q1 GDP growth contracted -0.3% on an annualized basis due to a 41.3% surge in imports. Moreover, Lee highlighted the U.S. ISM Manufacturing Index for April, which came in at 48.7, surpassing market expectations. While it remains in contraction territory, the increase in new orders was a promising sign. "This indicates that while economic sluggishness is inevitable, the tariff-related shock is less severe than feared," he said. # Markets Watch FOMC and Trade Updates Looking ahead, Lee predicted that the South Korean stock market would be highly responsive to developments in trade talks, economic indicators, and signals from the U.S. Federal Reserve. The FOMC meeting scheduled for May 8, Korean local time, is anticipated to result in no change to interest rates. "This expectation is largely priced in," Lee remarked. However, Powell’s press conference and future monetary policy guidance will be crucial. "The market will also scrutinize the Fed’s assessment of Trump’s policies on growth and inflation," Lee stated, adding that any indication of the Fed’s willingness to stabilize stressed markets could be reassuring. In contrast, rising inflation expectations or increased tensions between Powell and Trump could impact equity markets negatively. # Persistent Geopolitical and Trade Tensions The unpredictability of Trump’s policies and ongoing U.S.-China trade tensions present persistent risks. "Both countries have imposed significant tariffs making trade nearly impossible and are now engaged in a blame game over the trade talks, maintaining elevated tensions," Lee analyzed. Nevertheless, he maintained a cautiously optimistic outlook, suggesting that the peak of uncertainty has likely passed. "The intensity of rhetoric and retaliatory actions seems to be diminishing. This should lead to reduced volatility and improved market sentiment," he noted. # Key Economic Events This Week May 5: U.S. April ISM Non-Manufacturing Index May 6: China April Caixin Services PMI May 7: Europe March Retail Sales Data May 8: U.S. May FOMC Interest Rate Decision; Q1 Nonfarm Productivity May 9: China April Export and Import Data; Japan March Worker Cash Earnings Market participants will closely monitor these data points and events to gauge the global economy's direction and financial markets' health.