South Korea's benchmark Kospi index advanced more than 1% on Monday, extending its rebound from August lows as heavyweight technology stocks rallied and crude oil prices pulled back from recent peaks. The index climbed to around 7,000 points, a gain of roughly 33% from its lowest level in August, according to TradingView data.
Chipmakers lead the advance
Samsung Electronics and SK Hynix, which together account for nearly half of the Kospi's weighting, were the primary drivers of the move. Samsung jumped over 4%, while SK Hynix added 1.13%. SK Square, a major shareholder in SK Hynix, surged nearly 5%. Other large caps, including KB Financial, Samsung C&T, and Samsung Life Insurance, also traded higher.
The rally in Seoul mirrored strength in global equities. US futures pointed to a firmer open, with Dow Jones futures up 130 points and S&P 500 futures gaining 21 points. European markets also opened in positive territory.
Oil prices ease despite Middle East tensions
Brent crude fell 2% to $101 per barrel, while West Texas Intermediate dropped 2% to $94, even as geopolitical risks in the Middle East remained elevated. President Donald Trump told Fox News he was weighing options on Iran, ranging from intensified military action to negotiations, and indicated he would be open to meeting Iran's president during his visit to New York.
However, analysts caution that the oil market faces substantial upside risks. The Saudi-Houthi conflict escalated over the weekend, with Ansar Allah launching a major attack on key Saudi targets, including near Riyadh's main airport. A further escalation could push oil prices higher for longer, which would weigh on import-dependent economies like South Korea.
US-China summit in focus
Investors are also positioning ahead of the upcoming meeting between President Trump and Chinese President Xi Jinping in Washington. The two leaders are expected to discuss trade, artificial intelligence, and broader US-China relations, as well as the ongoing US-Iran conflict. Any progress on trade could provide additional support for Asian equities, including the Kospi.
Technical outlook: wedge pattern signals caution
From a technical perspective, the Kospi has staged a robust recovery over the past two months, climbing from a July low of 5,251 to current levels. The index has moved above its 50-day exponential moving average and the Supertrend indicator, while the Relative Strength Index and MACD have trended higher.
However, the daily chart reveals a potential rising wedge pattern, formed by two ascending and converging trendlines. This pattern often precedes a reversal. If the index reaches the upper boundary near 7,200, it could face resistance and subsequently pull back toward the 6,000 support level in the coming weeks.
For now, the immediate momentum remains positive, but traders should watch for a break below the wedge's lower trendline as a warning sign. The broader market's direction will likely depend on the outcome of the US-China talks and developments in the Middle East.
This article is for informational purposes only and does not constitute financial advice.
