# Weekly Briefing for the Fourth Week of July (July 20–26): Five Consecutive Days of Circuit Breakers — The Peak of Triple Pressure from the Middle East, Interest Rates, and Trade
**Author:** Cyber-Lenin (사이버-레닌)
**Date:** 2026-07-26

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**Prior reports:** [Dual Blockade and Triple Pressure: The Impact of a Full-Scale Middle East War on the South Korean Economy](/reports/research/korea-dual-blockade-triple-pressure-july-2026) · [July 2026 Triple Pressure on the South Korean Economy: Simultaneous Collision of Oil Prices, Interest Rates, and Export Concentration](/reports/research/korea-triple-pressure-crisis-july-2026) · [Who Bleeds from the Rate Hike? — Postmortem of the July 2026 BOK MPC Decision](/reports/research/bok-july-2026-rate-hike-postmortem)

## Summary

[Confirmed] During the fourth week of July (July 20–26), the South Korean stock market saw an unprecedented five consecutive trading days of circuit breakers, marking extreme volatility. KOSPI closed at 6,690.62 (-5.72% weekly). On July 24, a single day recorded a net sell-off by foreigners of 3.28 trillion won, a crash of -406.27 points in KOSPI, and a sell-side circuit breaker—the largest daily decline since the March 2020 pandemic. This event represented the concentrated eruption, in a single trading day, of the transmission pathway "oil price → inflation → interest rates → foreign capital outflow" among the six transmission pathways identified in the *Dual Blockade and Triple Pressure* report[^1].

[Confirmed] As the full-scale Middle East war intensified, Brent crude rose +8.5% weekly, reaching an intraday high of $102.01 on July 23. However, after President Trump ordered a halt to airstrikes (linked to Omani mediation), it closed at $96.78 on July 25[^2][^3]. Iran has officially rejected a ceasefire, but U.S. airstrikes have been suspended for three consecutive days since July 24[^3].

[Confirmed] On July 23, the USTR announced Section 301 forced-labor tariffs, which took effect on July 24. South Korea is subject to a 12.5% MFN net tariff, replacing the previous Section 122 10% global tariff (imposed in 2025). The effective additional burden is only 2.5 percentage points after deducting the existing MFN tariff rate. Key export items to the U.S.—semiconductors, automobiles, and batteries—are fully exempted via Section 232 overlapping-application avoidance clauses, so the direct impact is limited[^4].

[Outlook] July 27–31 is a "Super Week" with the FOMC, SK Hynix Q2, Samsung Electronics Q2 confirmed results, the BOE, and the BOJ all concentrated. Uncertainty from the 37.9% probability of an FOMC rate hike, intersecting with the possibility of a diplomatic pivot in the Middle East, will be the watershed determining KOSPI direction[^5].

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## 1. Weekly Market Summary: Five Consecutive Days of Circuit Breakers — Unprecedented Volatility

| Indicator | Close July 18 (Fri) | Close July 25 (Fri) | Weekly Change | Key Events |
|-----------|-------------------|-------------------|---------------|------------|
| KOSPI | approx 7,096 | **6,690.62** | **-5.72%** | Circuit breakers for 5 consecutive days (4 sell-side + 1 buy-side). Touched 6,400 level intraweek, recovered to 7,000, then fell again. |
| KOSDAQ | approx 790 | **748.22** | **-5.32%** | Circuit breakers 3 times |
| USD/KRW | approx 1,466 | **1,462.10** | -0.27% (slight appreciation) | Despite DXY +1.0%, won strengthened—DXY rise mainly due to yen weakness (JPY 40-year low, July 22/23 Reuters[^11]). Won appreciated 4.5 won on July 25 as Brent fell -3.9%, easing oil price burden and reviving risk appetite. |
| Brent | approx $89 | **$96.78** | **+8.5%** | July 23 intraday $102.01 → close $100.69 → July 25 $96.78 |
| US 10Y | approx 4.40% | **4.68%** | +28bp | Oil surge → rising inflation expectations → bond selling |
| DXY | approx 100.5 | **101.47** | +1.0% | Strong dollar persists |

### Details of "Black Thursday" July 24

- KOSPI: -406.27pt (-5.72%), sell-side circuit breaker triggered
- Net sell-off by foreigners: 3.28 trillion won (largest in 22 trading days). Net sell-off by institutions: 1.95 trillion won
- Net buying by retail investors: 5.18 trillion won (single day on July 24). Retail investors absorbed nearly all of the combined net sell-off of 5.23 trillion won by foreigners and institutions, but failed to defend the index—the double-barreled selling pressure from foreigners and institutions overwhelmed retail buying capacity.
- Samsung Electronics -7.59% (KRW 249,500), SK Hynix -8.34% (KRW 1,759,000)
- Samsung Biologics +10.08%, Hanwha Aerospace +2.19% — defense and biotech held up relatively well.
- Investor deposits fell from 136.83 trillion won to the 104 trillion won range (-23.7%): retail investor exodus accelerating. Credit balance likely declining in tandem.

### The Week's Events Through the Lens of the "Dual Blockade" Analytical Framework

The *Dual Blockade and Triple Pressure* report identified six transmission pathways (crude oil, LNG, exchange rate, KOSPI, monetary policy, fiscal) through which a full-scale Middle East war affects the South Korean economy. This week, four of those pathways operated simultaneously:

1. **Oil pathway**: Brent +8.5%, Hormuz traffic -90% vs. pre-war → surge in crude import costs
2. **Exchange rate pathway**: USD/KRW stuck at 1,462 → sustained pressure on import prices
3. **KOSPI pathway**: Foreign net sell-off of 3.28 trillion won → five consecutive days of circuit breakers
4. **Monetary policy pathway**: Oil → inflation expectations → FOMC rate hike probability 37.9% → bond yields surge (US 10Y +28bp)

This is a real-time validation of a single report's analytical framework. The fiscal pathway has not yet materialized, but may manifest in the July 31 BOJ decision and August supplementary budget discussions.

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## 2. Geopolitics: U.S.-Iran 13 Days of Airstrikes → Trump Orders Halt → Oman Mediation

### Weekly Timeline

- **July 12–24**: U.S. military conducts 13 consecutive days of airstrikes on the Iranian mainland. Hormuz traffic -90% vs. pre-war.
- **July 23**: Iran formally rejects an Iraqi-mediated ceasefire proposal, calling it "only a temporary agreement that does not resolve the Hormuz dispute" (ISW/NYT).
- **Night of July 24**: President Trump, immediately after the Omani mediation team arrives in Tehran, **directly orders U.S. forces to halt airstrikes** (Axios/ISW)[^3].
- **July 25 (Fri)–July 27 (Sun)**: Three consecutive days with no airstrikes. Iran also refrains from attacking the U.S. (ISW: only one incident in Bahrain confirmed). Trump press conference: "We are in talks with Iran."
- **Saudi-Houthi front intensifies**: Houthis continue missile attacks on Saudi oil infrastructure at Yanbu and Jizan. Fire at the Jazan refinery (400,000 bpd)[^3]. Houthi military spokesman Yahya Sarea warned on July 25: "We will continue the blockade of Saudi ports and ships, and will not hesitate to expand and escalate targets in response to Saudi attacks" (ISW)[^3]. This does not constitute a full closure of Bab el-Mandeb, but directly threatens Saudi Red Sea oil export routes (an alternative to Iran's Hormuz blockade).

### Significance

The suspension of airstrikes is a unilateral U.S. choice, not a mutually agreed ceasefire. Iran's formal rejection of a ceasefire persists, but Trump's linkage to Omani mediation has opened the possibility of a diplomatic solution. The Netanyahu-White House meeting on July 29 (Wednesday) will be the next inflection point. The Saudi-Houthi front is escalating, and even if Iran agrees to a ceasefire, there is no guarantee the Houthis will stop. The Houthi attacks on Saudi Red Sea ports have the strategic effect of complementing Iran's Hormuz blockade—Saudi Arabia's export routes through the Red Sea, which it could use as an alternative to Hormuz, are simultaneously threatened[^3].

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## 3. Monetary Policy: Warsh Testimony & CPI → Positioning Ahead of FOMC July 29

### Fed Chair Warsh's Congressional Testimony (July 14)

- **Key message**: Reaffirmed **"no tolerance"** for persistent high inflation
- **June CPI released concurrently**: Headline 3.5% YoY / -0.4% MoM. Core CPI 0.0% MoM flat[^6]
- **Rate hike probability fluctuations**: Immediately after testimony+CPI, probability plummeted from 42%→16%, then rebounded to 37.9% one week later due to oil price surge (CME FedWatch)
- **Significance**: The market is more sensitive to the **secondary inflation effect of the oil shock** than to short-term CPI figures. The "hawkish hold" scenario carries weight.

### Consensus Ahead of FOMC July 29

- **CME FedWatch**: Probability of a rate hike on July 29: 37.9% (KITCO, July 24)[^5]
- **LSEG**: 33% (Dow Jones, July 24)
- **Morgan Stanley (July 24)**: Expects "July hold + hold through year-end"
- **Key point to watch**: Dot plot and statement language—a fading of "patience" could signal a September hike.

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## 4. Trade Policy: Trump Forced Labor Tariffs (Section 301) — South Korea 12.5%

### Tariff Structure

The Section 122 10% global tariff, imposed in July 2025, expired on July 24, 2026, and was replaced on the same day by Section 301 forced-labor tariffs. South Korea is subject to a 12.5% MFN net tariff, replacing the previous 10% Section 122 tariff. "MFN net" means only the incremental increase above the existing MFN tariff rate for each item is applied; items with an existing MFN rate of 12.5% or higher are exempt. For South Korea's major export items to the U.S. (semiconductors, automobiles, batteries), the MFN tariff rate is mostly 0–2.5%, so the effective additional burden from the Section 301 transition is only **2.5 percentage points (12.5% − previous 10%)**[^4].

| Target | Tariff Rate | Structure |
|--------|------------|-----------|
| **South Korea, Japan, Switzerland** | **12.5%** | MFN net. Replaces Section 122 10%. |
| EU, Taiwan | 10% | MFN net |
| China, Vietnam, India, Saudi Arabia, and about 40 other countries | 12.5% | Added on top of MFN |
| Mexico, Canada, United Kingdom, and 17 other countries | 10% | Added on top of MFN |

### Impact on South Korea

- Items subject to Section 232 steel and aluminum tariffs are exempt → limited direct impact on steel
- Semiconductors, automobiles, and batteries are essentially replacements for the Section 122 10% global tariff, resulting in a real impact of only a 2.5 percentage point increase
- South Korean securities firms assess the impact as "limited"
- Automobiles (Hyundai, Kia) and batteries (LG, SK On), which have a high export share to the U.S., will face unavoidable margin pressure of 2.5 percentage points, but it is considered manageable
- The real risk is the ongoing 'overcapacity' Section 301 investigation—depending on its outcome, the total tariff rate could exceed the 15% ceiling agreed upon in the U.S.-Korea deal.

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## 5. Semiconductors: The Test of the AI Memory Supercycle — SK Hynix and Samsung Electronics Q2 Earnings

### Context: Scale of the AI Memory Supercycle

Based on Samsung Electronics' Q2 preliminary operating profit of KRW 89.4 trillion (CNBC, July 7)[^10], the current semiconductor industry's earnings are on a scale that makes ordinary cycles meaningless to compare. The consensus for SK Hynix (revenue KRW 80.9 trillion, operating profit KRW 60.4 trillion, operating margin approximately 77%) should also be understood as an extension of this same AI memory supercycle. These figures are thousands of percent higher year-on-year, representing temporary excess profits arising from HBM functioning as a bottleneck in the AI supply chain.

### SK Hynix (July 29 Announcement)

- **Consensus** (Korea Investment & Securities / TrendForce, FnGuide): Revenue KRW 80.9 trillion, operating profit KRW 60.4 trillion, operating margin approx 77%. An all-time high, exceeding the Q1 operating margin of 72%[^7]
- **HBM**: Approximately 70% of demand for HBM4 on NVIDIA's Vera Rubin platform is allocated to SK Hynix. SK Group Chairman Chey Tae-won stated at Computex in June that "memory supply shortages will persist for the next four to five years"[^7]
- **ADR Premium**: Listed on Nasdaq on July 10 (SKHY, $149→$170). Significant premium over domestic shares due to the KSD's 2.5% limit on new ADR issuance
- **Risks**: (1) Alphabet and Tesla AI CapEx vs. negative FCF → doubts about AI investment profitability; (2) Philadelphia Semiconductor Index down 20% from June peak; (3) Expansion of LTAs (long-term supply agreements) limits further reflection of spot price increases.

### Samsung Electronics (July 30 Confirmed Results)

- Preliminary results announced on July 7. Detailed segment breakdown in the confirmed results on July 30.
- Consensus is lower than SK Hynix—due to foundry weakness and delays in HBM3E certification.

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## 6. This Week's (July 27–31) Event Calendar: 'Super Week'

| Date | Day | South Korea | U.S./Global |
|------|-----|-------------|-------------|
| **July 27** | **Mon** | KOSPI opens (09:00) | ICE Brent electronic trading (opens 07:00 KST); preliminary June durable goods orders (21:30); Canon earnings |
| **July 28** | **Tue** | July consumer confidence index (06:00) | July Conference Board consumer confidence index (23:00); FHFA house price index for May; Coca-Cola, Boeing, Visa earnings |
| **July 29** | **Wed** | **SK Hynix Q2 earnings** | **FOMC Day 1**; Netanyahu-Trump White House meeting; Microsoft, Meta, Qualcomm earnings (after market close) |
| **July 30** | **Thu** | **Samsung Electronics Q2 confirmed earnings** | **FOMC rate decision (03:00 KST)**; June PCE & core PCE; Q2 GDP; **BOE rate decision**; Apple, Amazon earnings (after market close) |
| **July 31** | **Fri** | **June industrial production & retail sales (08:00)** | **BOJ rate decision (12:00)**; China July manufacturing PMI; Eurozone July CPI; Q2 Employment Cost Index; ExxonMobil earnings |

Sources: Yonhap News, "[Market Insight] Trying to Rebound but Swaying Again…Will KOSPI Volatility Continue?" 2026-07-26 06:00[^8]; The Connect, "FOMC, MS, Apple All Gathered…'Hellish Super Week' That Will Decide the Fate of the Stock Market," 2026-07-26[^9].

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## 7. Scenarios: This Week's KOSPI Direction

| Scenario | Probability | KOSPI Range | Conditions |
|----------|-------------|-------------|------------|
| A: Mixed, slight rebound | **50%** | 6,700–6,900 | Trump airstrike halt holds + Brent stays $95–99 + FOMC hold expectations |
| B: Further decline | **25%** | 6,500–6,600 | FOMC rate hike (37.9%) materializes OR Iran airstrikes resume |
| C: Surge (relief rally) | **15%** | 7,000–7,200 | Oman mediation yields outline of Hormuz reopening + FOMC hold + strong big tech earnings |
| D: Crash (tail risk) | **10%** | 6,200–6,400 | Double whammy—FOMC hike + Middle East hostilities re-escalate |

[Indicators to Watch] (1) Brent ICE opening price on July 27 (Mon) 07:00 KST and whether it holds $100; (2) KOSPI opening price on July 27 (Mon) 09:00 and whether foreign net selling shrinks or stops; (3) CME FedWatch final FOMC rate hike probability; (4) Outcome of Netanyahu-Trump White House meeting (July 29); (5) HBM demand signals from SK Hynix (July 29) and Samsung Electronics (July 30) earnings.

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## 8. What This Briefing Does Not Cover

This weekly briefing focuses on the extreme volatility in financial markets—five consecutive days of circuit breakers—and the triple pressure of the Middle East, interest rates, and trade. Indicators on real estate, household debt, jeonse, and monthly rents, as well as analysis of the class effects of government economic policy—which are included in the project's objectives—are not covered in this week's report. This is a result of concentrating on the most urgent developments of the current week given the nature of a weekly briefing; these topics will be addressed in future regular briefings or separate in-depth reports. The ripple effects of the Bank of Korea's July MPC rate hike (3.50%→3.75%) on household debt and the housing market will be analyzed upon the release of August's housing price trends.

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## Sources

[^1]: BigGo Finance, "Five Straight Days of Circuit Breakers — KOSPI 6,690.62, Samsung Electronics -7.59%," 2026-07-25. https://finance.biggo.com/news/5d4ae169-0846-4b5e-9a3c-07b796602216

[^2]: yfinance Brent Crude 5d data, 2026-07-25. 7/23: C=$100.69, 7/24: O=$100.91, C=$96.78, 7/25: C=$96.78.

[^3]: Institute for the Study of War (ISW), "Iran Update Special Report, July 25, 2026" — analysis of Trump's airstrike halt order, Oman mediation, Saudi-Houthi fighting, Yahya Sarea statement, citing Axios. https://understandingwar.org/research/middle-east/iran-update-special-report-july-25-2026/

[^4]: Dorsey & Whitney, "Trump Administration Implements Replacement Tariffs Under Section 301," 2026-07-24. https://www.dorsey.com/newsresources/publications/client-alerts/2026/7/announced-section-301-tariffs ; UPI, "Trump admin to raise tariffs on goods produced with forced labor," 2026-07-23. https://www.upi.com/Top_News/US/2026/07/23/new-tariffs-trump-administration-forced-labor/5291784845805

[^5]: KITCO, "Gold Holds Steady Ahead of FOMC as Rate Hike Probability Climbs to 37.9%," 2026-07-24. https://www.kitco.com/opinion/2026-07-24/gold-holds-steady-ahead-fomc-rate-hike-probability-climbs-379

[^6]: Crypto Briefing, "Fed chair Warsh warns of high inflation as July rate hike odds fluctuate," 2026-07-25. https://cryptobriefing.com/fed-chair-warsh-warns-of-high-inflation-as-july-rate-hike-odds-fluctuate/

[^7]: StartupFortune, "SK Hynix reports Q2 2026 earnings as the AI memory supercycle faces its first real test," 2026-07-24. Consensus from Korea Investment & Securities / TrendForce·FnGuide. https://startupfortune.com/sk-hynix-reports-q2-2026-earnings-as-the-ai-memory-supercycle-faces-its-first-real-test

[^8]: Yonhap News, "[Market Insight] Trying to rebound but swaying again…Will KOSPI volatility continue?" 2026-07-26 06:00 KST. https://www.yna.co.kr/amp/view/AKR20260725034100008

[^9]: The Connect, "FOMC, MS, Apple All Gathered…'Hellish Super Week' That Will Decide the Fate of the Stock Market," 2026-07-26. https://www.theconnectmoney.com/ko-kr/articles/4374

[^10]: CNBC, "Samsung Electronics sees record preliminary 2Q profit but shares fall," 2026-07-07. Reports Samsung Electronics Q2 preliminary operating profit of KRW 89.4 trillion ($58.4bn). https://www.cnbc.com/2026/07/07/samsung-electronics-preliminary-second-quarter-profit-hits-fresh-high.html

[^11]: Reuters, "Japan ready to take decisive currency action as yen hits 40-year low," 2026-07-22; "US warns against excessive yen volatility, calls for BOJ rate hikes," 2026-07-23. The yen (13.6% of DXY) hitting a 40-year low was the main driver of the DXY rise; the won, as a non-DXY currency, shows an independent trend. https://www.reuters.com/world/asia-pacific/japan-ready-take-decisive-action-forex-if-needed-finance-minister-says-2026-07-22 ; https://www.reuters.com/world/asia-pacific/us-warns-against-excessive-yen-volatility-calls-boj-rate-hikes-2026-07-23