The U.S. stock market closed lower last week due to a surge in international oil prices stemming from tensions in the Middle East and inflation concerns. Although the sell-off in artificial intelligence (AI) stocks eased somewhat, high oil prices and rising Treasury yields dampened investor sentiment across the financial, industrial, and consumer sectors. With the U.S. Federal Open Market Committee (FOMC) meeting and earnings reports from major tech and domestic semiconductor companies scheduled for this week, the domestic stock market is expected to continue experiencing volatility ahead of these key events.
On October 23, the Dow Jones Industrial Average fell by 652.82 points (1.23%) to close at 52,215.16. The S&P 500 dropped 39.75 points (0.52%) to finish at 7,623.68, while the tech-heavy Nasdaq Composite declined by 53.52 points (0.21%) to end at 25,955.34.
The spike in oil prices has been a significant burden on the stock market. Concerns over a potential military conflict between the U.S. and Iran have heightened fears of disruptions in oil supply. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude for December delivery rose by $3.80 (3.82%) to settle at $103.27 per barrel. Meanwhile, Brent crude for December delivery increased by $3.55 (3.14%) to reach $116.72 per barrel on the ICE Futures Exchange in London.
The rise in oil prices has led to heightened inflation concerns and the possibility of prolonged high interest rates. The yield on the U.S. 10-year Treasury note briefly surpassed 5%, with the market wary that sustained inflationary pressures could delay the Federal Reserve's easing of monetary policy. This week, the October FOMC meeting and the release of the September Personal Consumption Expenditures (PCE) price index are expected to contribute to ongoing uncertainty regarding interest rate trajectories.
In the domestic market, investor sentiment is likely to remain cautious ahead of major events. As of 8:49 a.m., pre-market trading on NXT showed declines for Samsung Electronics (-0.70%), SK Hynix (-0.63%), SK Square (-2.19%), LG Energy Solution (-1.31%), and Samsung Electro-Mechanics (-2.32%).
Han Ji-young, a researcher at Kiwoom Securities, projected the KOSPI's expected trading range for this week to be between 5,300 and 5,800 points. With significant domestic and international events, including the U.S. FOMC meeting, PCE price index release, and earnings reports from major tech firms, as well as Samsung Electronics and SK Hynix, volatility is anticipated to increase.
Particularly, the earnings reports from major U.S. tech companies such as Amazon, Alphabet, and Microsoft will focus on the profitability and cash generation capabilities of AI investments. One analyst noted, "If large-scale capital investments lead to improvements in cloud revenue and cash flow, concerns over excessive AI investment may ease. However, if monetization lags behind investment expansion, it could weigh on the stock recovery of AI infrastructure and semiconductor sectors."
Domestically, attention is centered on the earnings reports and conference calls of Samsung Electronics and SK Hynix. An analyst stated, "Market interest is shifting beyond current profit levels to the sustainability of semiconductor profits beyond 2027-2028. Therefore, demand and price forecasts for high-bandwidth memory (HBM) and general-purpose DRAM, as well as supply changes due to capacity expansions, will be key points of observation."
Shareholder return policies also present variables. The impact of Samsung Electronics' dividend and future shareholder return plans, along with SK Hynix's potential additional shareholder return measures, could influence investor sentiment and supply dynamics. The earnings of non-semiconductor companies such as Hanwha Ocean, Hyundai Motor, Hanwha Aerospace, and Samsung Electro-Mechanics are also expected to be factors affecting sector-specific stock movements.
One analyst concluded, "Given the potential for increased volatility during this week of significant domestic and international events, it is essential to monitor U.S. monetary policy, AI investment profitability, and signals related to the earnings and shareholder returns of domestic semiconductor companies."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.