🛢️ Oil Tumbles From the $100 Line, KOSPI Rebounds to 6,755 — Mideast Fears Ease, Now All Eyes on the FOMC

The “Middle East oil spike” that weighed on the KOSPI last week reversed course in a single day. Word that the United States and Iran had halted roughly two weeks of armed conflict and entered back-channel talks sent crude prices sharply lower, and fears of a blockade in the Strait of Hormuz quickly eased. On July 27 the KOSPI rebounded 0.97% to the 6,755 level. Now the market’s gaze is turning to the U.S. Federal Open Market Committee (FOMC) decision, due early Thursday morning Korea time. 🛢️

Key Takeaways (TL;DR)

News of easing U.S.-Iran tensions drove crude sharply lower (Brent around $90, WTI in the $80s), pulling back Middle East risk.
On July 27 the KOSPI rebounded to 6,755.75 (+0.97%) and the KOSDAQ to 764.86 (+2.22%); retail and institutions cushioned heavy foreign selling.
The week’s biggest swing factors are the FOMC early Thursday (a hold looks likely) and a rush of Big Tech and semiconductor Q2 earnings.

🛢️ Why Did Oil Plunge in a Single Day?

The heart of it is a step back in Middle East geopolitical risk. As reports emerged that the U.S. and Iran had paused nearly two weeks of armed conflict and moved into back-channel negotiations, fears that a Hormuz blockade could choke off crude supply subsided.

Iranian state broadcasting reported that the two sides were discussing an informal draft in the form of a memorandum of understanding (MOU). The draft reportedly includes the U.S. scaling back its military deployment near Iran and easing the maritime blockade.

On price action, Brent crude had briefly topped $100 a barrel this month as Middle East tensions flared, but it retreated to around $90 on July 27 (local time). West Texas Intermediate (WTI) also dropped roughly 7-8% to settle in the $80s. That said, exact closing prices differ by delivery month and by source (for example, WTI for August delivery in the low $82 range, and the front month in the high $88 range), so the precise figure needs confirmation. What is consistent across sources is the direction and the cause: a plunge driven by easing U.S.-Iran tensions.

Falling oil matters because it lowers inflationary pressure. Last week’s oil surge had weighed on risk assets amid fears of a fresh flare-up in prices, so this reversal became a source of relief in the opposite direction.

📈 How Did Korean Stocks React?

On July 27, domestic stocks rebounded on the back of easing Middle East risk. The KOSPI closed up 65.13 points (0.97%) at 6,755.75, and the KOSDAQ rose 16.64 points (2.22%) to 764.86.

Trading flows were mixed. Foreign investors sold a net 2.9039 trillion won on the main board, but retail investors bought about 1.98 trillion won and institutions about 862.6 billion won, holding the index up.

The won-dollar exchange rate finished daytime trading at 1,468.5 won, up 1.9 won from the prior session, staying within the recent 1,460-1,480 range.

🌃 How Did Wall Street Fare Overnight?

U.S. equities also held up broadly, helped by lower oil. The Dow Jones Industrial Average rose about 0.5% to hover near a record high around the 52,000 level. The S&P 500, by contrast, was little changed, and the Nasdaq slipped about 0.2% as semiconductor and artificial-intelligence (AI) names weakened.

By sector, real estate and consumer-defensive stocks — seen as beneficiaries of cheaper oil — outperformed, while energy and tech lagged. Lingering caution over Big Tech’s massive AI capital spending (capex) kept chip stocks a drag on the index. Because index levels vary slightly by source, it is safer to read them for direction rather than precise figures.

🏦 The Week’s Big Swing Factors: The FOMC and Big Tech Earnings

The event most likely to set the market’s direction this week is the FOMC. The U.S. Federal Reserve holds its policy meeting on July 28-29 local time and announces its rate decision early Thursday morning Korea time. With the current policy rate at 3.50-3.75%, the market widely expects a hold at this meeting. Notably, this meeting does not include a Summary of Economic Projections (SEP), so the key thing to watch is whether the statement wording and the press conference offer signals about the future rate path.

The earnings calendar is dense too. Major U.S. tech companies report Q2 results one after another this week, and domestic semiconductor firms are also scheduled to post Q2 numbers. How well expanding AI investment is backed up by actual earnings and capex plans is set to be the fault line in the ongoing “AI bubble vs. supercycle” debate.

🧭 The Bottom Line: One Risk Steps Back, With the FOMC as the Next Test

This move can be summed up as “a day when one geopolitical risk stepped back.” The Middle East oil spike that weighed on the market last week was reversed by easing U.S.-Iran tensions, and stocks at home and abroad rebounded in relief. Lower oil easing the inflation burden is also supportive.

Of course, there are clear caveats. First, the U.S.-Iran talks are still at an informal draft stage, so it is hard to rule out that the situation could flip again. On top of that, the FOMC’s rate decision and the tone of its statement early Thursday, together with Big Tech and semiconductor earnings, all land at once and could amplify volatility. And with foreign selling continuing, it remains to be seen how long the pattern of retail and institutions propping up the index can hold. In the space left by one retreating risk, the next test is already waiting.

※ This article is for informational purposes only and is not investment advice.

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