[R&E] Mixed Market Signals Amid Plunging Oil Prices; Shipbuilding and Steel Sector Earnings Forecasts Drive Investor Sentiment

[R&E: Research & Epoch]

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Global Market Brief

The New York stock market closed higher the previous day, driven by expectations of easing inflationary pressures and the potential resolution of geopolitical tensions. In particular, the U.S. Producer Price Index (PPI) for March rose 0.5% month-on-month, falling significantly short of the market expectation of 1.1%, which was decisive. This restimulated expectations for a Federal Reserve interest rate cut, acting as a driving force for the S&P 500 (SPX) index to record 6,967.38pt (+1.18%) and the Nasdaq Composite (IXIC) index to reach 23,639.08pt (+1.96%). The Philadelphia Semiconductor Index also rose +2.04%, supporting the strength of tech stocks.

At the same time, international oil prices plummeted. West Texas Intermediate (WTI) crude prices fell -7.87% from the previous day to $91.28. This is the result of growing expectations for a second round of end-of-war negotiations between the U.S. and Iran, along with President Trump mentioning the resumption of talks, which spread analysis that the supply instability originating from the Middle East will be resolved. The plunge in oil prices is interpreted as short-term relief from inflationary pressures, reinforcing the overall market preference for risky assets. The Dollar Index also dropped to 98.123 (-0.25%), proving an improvement in investor sentiment. However, traffic volume in the Strait of Hormuz remains minimal, suggesting that further confirmation is needed as to whether the geopolitical risks have been fundamentally resolved.

Domestic Market Summary

On the previous trading day, the domestic stock market showed strength, in line with the warmth of the New York stock market and signals of a global inflation slowdown. The KOSPI index closed at 5,967.75pt (+2.74%), and the KOSDAQ index closed at 1,121.88pt (+2.00%), revealing an overall improvement in investor sentiment. The KRW/USD exchange rate recorded 1,472.3 won, down 9.9 won from the previous day, creating a favorable environment for foreign capital inflows. Domestic government bond yields also showed a downward trend, with the stability in the bond market positively impacting the stock market. It is analyzed that the improvement in global macroeconomic indicators and expectations of easing geopolitical tensions worked in combination to strengthen the preference for risky assets in the domestic stock market.

Industry Key Issues and Insights

The shipbuilding and equipment sector has proven its structural growth momentum. HD Hyundai Marine Engine (KOSPI: 071970) recorded an operating profit of 30.2 billion won in the first quarter of 2026, surging 193.7% compared to the same period last year. Sales also increased by 53.0% year-on-year to 127 billion won. This is the result of even growth across the engine and parts businesses, driven by a booming shipbuilding industry and demand for the transition to eco-friendly ships. Operating profit in the engine division increased by 159.8% to 22.6 billion won, and operating profit in the parts division surged 373.0% to 7.6 billion won.

Hanwha Engine (KOSPI: 082740) also reported a first-quarter operating profit of 48.9 billion won, an increase of 119.2% year-on-year, exceeding market expectations. This strong performance is the result of the demand for eco-friendly ships due to strengthened global environmental regulations coinciding with the replacement cycle of aging vessels, suggesting that the mid-to-long-term growth foundation for domestic shipbuilding equipment companies has become solid. This is highly likely to lead to a revaluation of corporate value across the entire shipbuilding sector in the future.

The steel and metal sector achieved solid earnings thanks to rising non-ferrous metal prices. Poongsan (KOSPI: 103140) exceeded market consensus by recording first-quarter sales of 1.5 trillion won and an operating profit of 101.4 billion won. The key driver of the earnings improvement was the average LME copper price, which rose 37.5% year-on-year to record $12,845/ton. The strength in non-ferrous metal prices, such as copper and nickel, is a result reflecting expectations of economic recovery and supply-side instability. While this contributes to improving the profitability of related materials companies, it is expected to be a factor that increases the cost burden on downstream industries.

On the other hand, the energy utility sector fell short of market expectations despite the plunge in oil prices. The first-quarter operating profit of KEPCO (KOSPI: 015760) is forecast to be around 4.0 trillion to 4.2 trillion won, a figure that falls short of market expectations. This is because, despite the drop in international oil prices, the effect of easing the fuel cost burden was limited due to the time lag reflected in actual earnings and complex pricing factors. This highlights that the performance of public energy enterprises is influenced by complex variables such as government policies and tariff regulations, in addition to raw material prices.

Market Signals

• U.S. Producer Price Index (PPI) Slowdown: The March PPI rose by only 0.5% compared to the previous month, sending a signal of easing inflationary pressures.

• Plunge in International Oil Prices: WTI prices recorded $91.28, falling -7.87% from the previous day, reflecting expectations of easing Middle East risks.

• China's Import-Export Imbalance: March exports fell short of expectations, but imports surged 27.8%, exposing both a domestic demand recovery trend and the uncertainty of global trade simultaneously.

• Surge in Shipbuilding Equipment Earnings: HD Hyundai Marine Engine and Hanwha Engine recorded triple-digit operating profit growth rates side by side, proving an improvement in industry conditions.

• Strength in Non-Ferrous Metal Prices: The LME copper price rose to $13,284, showing a trend where supply chain anxiety and increased industrial demand intersected.

Epoch View: Investment Implications

The global stock market staged a relief rally the previous day, supported by the slowdown in inflation indicators and the easing of geopolitical tensions. In particular, the plunge in oil prices alleviated inflation concerns and led to an atmosphere of preference for risky assets. However, in the domestic market, the earnings improvement trend of KEPCO, which was expected to benefit from the drop in oil prices, fell short of expectations, whereas HD Hyundai Marine Engine and Poongsan delivered overwhelming performances based on structural growth and the strength of raw material prices.

This suggests that the fundamentals and supply chain dynamics of individual industries have become the core variables determining stock price differentiation, rather than the direction of macroeconomic indicators. Even if warmth spreads throughout the entire market, a micro-approach that closely examines the structural changes of individual industries is an essential condition for maximizing returns.

This content was generated using News Epoch's proprietary AI algorithm, which analyzes public data from research centers of major domestic securities firms and global financial media in real-time. It is an objective summary of data and is not a recommendation for investment in any specific stock.