Korean stock market witnesses rollercoaster swings: surging 80% over 10 weeks, followed by a 40% pullback in 5 weeks.
South Korea's stock market has recently been on a roller-coaster ride. The KOSPI index rose roughly 80% cumulatively over 10 weeks, before correcting around 40% in the subsequent five weeks — a swing far more volatile than major global indices. Data indicates that a 40% drop in the S&P 500 over five weeks would erase all its gains of the past five years, underscoring the extreme volatility of South Korea's current stock market movement. As of press time, the KOSPI index was down 7.9%.
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Viewpoint: South Korea's stock market circuit breaker mechanism has failed, making it difficult to effectively halt sell-offs.
Today, the KOSDAQ index plunged over 8% intraday, triggering a Level 1 circuit breaker (activated when the index drops more than 8% from the previous day’s close and stays at that level for one minute). The circuit breaker mechanism has failed to effectively halt sell-offs. Earlier on July 28, both the KOSPI and KOSDAQ triggered Level 1 circuit breakers on the same day, yet the KOSPI still plummeted 10.84% overall, while the KOSDAQ fell 7.72%. The core logic behind this round of sell-offs is the valuation re-rating of AI semiconductors paired with structural flaws in South Korea’s market. Samsung Electronics and SK Hynix together account for over 40% of the KOSPI’s total market capitalization, meaning fluctuations in these two stocks can dictate the broader market’s direction. Samsung Electronics is currently down 5.45%, and SK Hynix is down 9.81%.
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On the eve of the Federal Reserve's policy decision, Wall Street is betting on a "hawkish pause", with a nearly 30% chance of an unexpected interest rate hike.
The Federal Reserve will announce its interest rate decision on July 29 (Eastern Time; early morning of July 30 Beijing Time), and the market is bracing for one of the most unpredictable FOMC meetings in recent years. CME’s FedWatch tool shows traders currently assign a roughly 71% probability to the Fed holding rates steady in the 3.50%-3.75% range, while pricing in a roughly 29% chance of an unexpected 25 basis point rate hike. This round of uncertainty stems mainly from oil prices and inflation. Recurring tensions in the Middle East have pushed up energy prices, stoking market fears of resurging inflationary pressure. Meanwhile, recent inflation data has shown signs of cooling, making it far harder to gauge whether the Fed needs to act immediately. Wall Street broadly believes that even if the Fed holds steady this week, Chair Kevin Warsh may deliver a hawkish signal. Investors will closely watch three key points: whether the policy statement amplifies inflation risk warnings, whether there are dissenting votes in support of rate hikes, and whether Warsh leaves room for further increases later this year. For the market, the real risk lies in an upward revision of the interest rate path. If the Fed hints at more possible tightening, U.S. Treasury yields and mortgage rates may continue to climb, weighing on valuations of growth stocks and other interest-rate-sensitive assets. Strategists note that U.S. equities could see sharp volatility on decision day, as investors wait for Warsh to offer clearer policy direction.
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SK Hynix fell nearly 12%, while South Korea's KOSPI index extended its decline to 8%.
According to Bitget market data, South Korea’s KOSPI index has extended its downward trajectory, with its intraday decline expanding to 8% and a cumulative drop of 35% so far this month. SK Hynix’s intraday slump widened to nearly 12%, while Samsung Electronics fell 7.5%.
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Reuters: Wall Street cuts gold price forecast for first time in 11 quarters, central bank gold purchases still underpin long-term outlook
According to a Reuters survey, analysts have cut their gold price forecasts for the first time since the end of 2023. Twenty-nine analysts and traders project an average gold price of $4,509 per ounce in 2026, down from the $4,916 forecast three months ago; the 2027 average forecast has been lowered to $4,610 per ounce, from the earlier $5,100. Despite the downward gold price projections, the market widely holds that central banks’ continued gold purchases, geopolitical risks, and government debt pressures will still underpin gold’s long-term trajectory. Meanwhile, analysts have also trimmed their silver price forecasts, projecting a 2026 average of $72 per ounce, down from the prior $78. Furthermore, Commerzbank has once again cut its end-of-year gold target price to $4,500 per ounce, and lowered its silver target price to $67 per ounce. The bank argues that current market expectations for further Federal Reserve policy tightening are overblown; if inflationary pressures ease and the Fed keeps interest rates unchanged, gold is still poised to strengthen again in the future.
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