[Market View] U.S. stock market hitting record highs every day… KOSPI, rebound momentum Samna

(Seoul = Yonhap News) Reporter Hwang Cheol-hwan = On the 7th, there is a possibility that the domestic stock market will continue to search for direction due to mixed conditions such as a partial calming of U.S. Treasury yields, the strength of U.S. artificial intelligence (AI) infrastructure stocks, and a sense of caution ahead of the announcement of Samsung Electronics [005930]'s third quarter provisional results.

The previous day, KOSPI closed at 6,941.39, down 62.35 points (0.89%).

The index started at 7,044.67, up 40.93 points (0.58%), but the rise slowed and eventually turned downward.

As of the close of regular trading at 3:30 p.m., foreigners net sold 1.7491 trillion won, dragging down the index.

Institutions also net sold 1.9 billion won, but individuals and other corporations had a buying advantage of 740.5 billion won and 1.0122 trillion won.

There was no significant difference in trading performance by investor, including the aftermarket, with foreigners and institutions net selling KRW 1.7567 trillion and KRW 3.7 billion, respectively, and individuals and other corporations net buying KRW 744.1 billion and KRW 1.173 trillion.

During the National Foundation Day holiday, the U.S. stock market continued to be strong, led by technology stocks, but caution as U.S. Treasury yields soared to the highest level in 22 years exerted downward pressure on large-cap semiconductor stocks.

Samsung Electronics ended regular trading at 272,000 won, down 1.45% from the previous trading session, and SK Hynix closed at 1,773,000 won, down 3.69% from the previous trading session.

It seems that Samsung Electronics' preliminary third-quarter results scheduled to be announced this week, caution over the end of share buybacks, and controversy over the US listing of SK Hynix's US subsidiary, Solidigm, may have had an impact.

The KOSDAQ index closed at 919.92, up 26.63 points (2.98%) from the previous day. It has been about three months since KOSDAQ recovered to the 900 level based on the closing price, after closing at 929.35 on July 1.

Last night, the New York stock market closed with all three major stock indices rising at the same time.

The Dow Jones Industrial Average rose 0.49%. The Standard & Poor's (S&P) 500 Index and Nasdaq Composite Index rose 0.58% and 0.45%, respectively, reaching record highs.

Expectations for the performance of major companies have grown ahead of the third quarter earnings announcement season, which begins next week, and investment sentiment in risky assets has been ignited as U.S. Treasury yields and international oil prices have calmed down.

Goldman Sachs predicted that the earnings per share (EPS) of S&P 500 companies in the third quarter will increase by 27% compared to the same period last year, and in particular, companies that benefit from AI infrastructure investment will account for more than half of the total profit increase.

The U.S. 10-year Treasury bond interest rate was 5.281%, down 3bp (1bp = 0.01% point) from the previous level.

As France's leading presidential candidate, Marine Le Pen, a member of the National Coalition (RN), announced a stronger-than-expected fiscal austerity plan, saying that she would drastically reduce public spending when in power, French and European government bond yields fell significantly, and US government bond yields also showed a downward and stable trend.

Brent crude oil for December delivery closed at $100.58 per barrel, up 0.26% from the previous trading session, and West Texas Intermediate (WTI) crude oil for November delivery closed at $89.44 per barrel, up 0.01%.

Seo Sang-young, managing director of Mirae Asset Securities, said, "The fact that government bond interest rates in European countries such as France showed a downward and stable trend had an impact on alleviating anxiety, and when Marvell (+5.81%) presented long-term AI growth prospects on Investor Day, stocks related to customized chips, networks, and optical communications showed strength and led the rise in technology stocks."

Marvell's competitor, Broadcom (+3.67%), also showed strength, and Nvidia (+0.14%) rose nearly 2% at one point, approaching a market capitalization of $6 trillion, when BNP Paribas raised its target stock price from $285 to $345, but gave up the increase in profit-taking sales.

However, stock prices of memory semiconductors and storage companies were sluggish overall, and SK Hynix's American Depository Receipt (ADR) plunged 6.39%.

Managing Director Seo explained, "Despite mechanical supply and demand expectations due to ETF rebalancing, performance risks have been introduced ahead of the third quarter earnings announcement. AI memory demand and tight supply environment are maintained, but the decline in profits converted to overseas sales due to the strong won and the burden of large performance bonus provisions have spread to concerns about short-term profitability damage."

He also reported that Goldman Sachs lowered Samsung Electronics' third quarter operating profit estimate from 112 trillion won to 106 trillion won.

At the same time, Goldman Sachs said in a report that "short-term volatility will increase due to the announcement of Samsung Electronics' third quarter preliminary results on the 8th, expiration of options, mechanical selling following the rebalancing of seven semiconductor ETFs worth a total of 19 trillion won, and the disappearance of buying support following the completion of the purchase of treasury stocks worth 15 trillion won."

However, he added, "The fundamentals, such as the DRAM and NAND industry conditions and the expansion of HBM4 shipments, were evaluated as solid. In terms of supply and demand, Samsung Electronics' mechanical selling volume is expected to flow into SK Hynix, SK Square [402340], and semiconductor equipment stocks. The key point to watch is whether foreigners, who have been net sellers for the past five consecutive trading days, will return to the buying trend."

Most indicators related to investment sentiment in the Korean stock market fell.

Morgan Stanley Capital International (MSCI) Korea Stock Market ETF fell 2.64% and MSCI Emerging Index ETF fell 0.67%.

The Philadelphia Semiconductor Index rose 0.34%, but the Russell 2000 Index fell 0.59%, and the Dow Transportation Index also recorded a 0.45% decline.

KOSPI 200 overnight futures ended trading down 1.07%.

Han Ji-young, a researcher at Kiwoom Securities, said, “Today, the domestic stock market is expected to start on the rise thanks to the strength of US AI infrastructure stocks amid a favorable external environment such as the US 10-year interest rate falling below the 5.3% range and the calming of anxiety in the government bond market from Europe.”

However, he predicted, “Due to the waiting sentiment for Samsung Electronics' provisional performance during the day and the cautionary sentiment for the closure in the second half of the week, the upper end of the stock market is likely to be limited and turn into a circular selling market for the industry.”