South Korea's benchmark Kospi Index edged higher on Friday, rising over 1% to 6,663 points, as a temporary lull in US-Iran tensions and a rebound in heavyweight tech stocks provided support. The index remains trapped in a narrow trading range, with chart patterns suggesting a significant move may be imminent.
Tech Giants Lead Rebound
Samsung Electronics advanced 1.80%, while SK Hynix climbed 2.76%, helping lift the broader market. SK Square, a major shareholder in SK Hynix, surged 3.26%, and Samsung Electro-Mechanics, a producer of MLCCs and semiconductor substrates, gained over 2%. The rally in AI-related names followed OpenAI's launch of Astra, its most advanced model, and strong earnings from Dell and HP Enterprise. However, other heavyweights like Hyundai Motor, LG Energy Solution, Samsung Biologics, and KB Financial Group traded lower.
Geopolitical Calm and Oil Stability
The market found some relief as the US and Iran avoided further escalation overnight, with no US retaliation for Iranian strikes on targets in Kuwait. This helped stabilize crude prices, with Brent and WTI hovering around $96 and $92 per barrel, respectively. The relative calm also supported global equities, as seen in Wall Street's resilience.
Won Strength and Bond Yields
The South Korean won has been a standout, with the USD/KRW pair dropping to 1,355, its lowest level since June last year, and down over 13% from its 2025 peak. The currency's strength is partly attributed to the Bank of Korea's recent rate hike. Meanwhile, government bond yields have eased from weekly highs, with the 10-year yield at 4.35% and the 30-year at 4.634%. This comes as the government proposed a record $597 billion budget, supported by a 40% surge in tax revenue driven by AI-related corporate earnings. A new Future Response Fund, capitalized at 162.3 trillion won ($120 billion), will focus on long-term investments.
Technical Outlook: Triangle Points to Volatility
On the daily chart, the Kospi has formed a symmetrical triangle, with converging trendlines indicating that a breakout is approaching. The index is trading below its 100-day exponential moving average, and the Percentage Price Oscillator remains negative, suggesting bearish momentum. A break below the lower trendline could trigger a decline toward 6,000, especially as domestic deleveraging continues. Conversely, a move above the upper boundary would signal further upside. The upcoming US nonfarm payrolls data could be a catalyst, as Asian markets await the release.
Investors are also watching the AI sector's momentum, which has been a key driver for Korean tech stocks. The recent gains in Chinese AI names and Oracle's rally reflect the global enthusiasm, but sustainability remains a question.
With the triangle's apex near, traders should brace for heightened volatility. The direction of the breakout will likely set the tone for the Kospi in the coming weeks.
This article is for informational purposes only and does not constitute financial advice.
