Last weekend, the U.S. stock market rose due to easing concerns over interest rate hikes following a slowdown in July employment and a strong performance in technology stocks. As a result, the domestic market is expected to attempt a rebound on the 10th. Notably, the Philadelphia Semiconductor Index increased by 2.6%, and major tech stocks like Nvidia showed strength, raising hopes for a recovery in investor sentiment towards domestic semiconductor stocks, which had recently plummeted.
On the 7th, the KOSPI closed at 6,397.88, up 135.76 points (2.17%) from the previous trading day. The rebound in semiconductor stocks, including Samsung Electronics and SK Hynix, which had sharply declined due to foreign selling, led to the index's rise. In contrast, the KOSDAQ closed at 918.80, up 18.54 points (2.06%).
On the same day, the Dow Jones Industrial Average closed at 50,036.93, up 151.83 points (0.28%). The S&P 500 index rose by 47.68 points (0.62%) to finish at 7,757.64, setting a new all-time high, while the Nasdaq Composite increased by 342.26 points (1.30%) to close at 26,690.62.
The key driver behind the rise in the U.S. stock market was the slowdown in employment. According to the U.S. Department of Labor, non-farm payrolls decreased by 23,000 in July, significantly below the market expectation of an increase of 80,000. The employment growth figures for the previous two months were also revised downward. Although the unemployment rate fell to 4.1% from 4.2% in June, this was influenced by a decrease in the labor force participation rate. The employment slowdown is interpreted as reducing the likelihood of interest rate hikes by the Federal Reserve, thereby encouraging a preference for riskier assets.
Indeed, the projected likelihood of a rate hike at the September Federal Open Market Committee (FOMC) meeting, as reflected in the CME FedWatch, has dropped to around 44%. The weak employment data has been interpreted as a positive sign, alleviating concerns over monetary policy, leading to a so-called 'bad is good' market sentiment.
This easing of interest rate concerns is expected to particularly benefit growth stocks in the domestic market. Han Ji-young, a researcher at Kiwoom Securities, stated, "We anticipate that the KOSPI will begin to recover this week, addressing the phenomenon of leading stocks being overlooked."
Consequently, the KOSPI is likely to attempt a rebound, driven by the positive momentum from the U.S. market, particularly in the semiconductor sector. Last week, major domestic semiconductor stocks faced significant foreign selling, but the Philadelphia Semiconductor Index's 2.6% rise and the rebound of key tech stocks in the U.S. could lead to renewed buying interest in Samsung Electronics and SK Hynix.
If investor sentiment in the U.S. semiconductor sector recovers, there is a possibility of inflows of bargain-hunting in domestic stocks, especially since the recent sharp decline in semiconductor stocks has significantly dampened overall market sentiment. A successful rebound by Samsung Electronics and SK Hynix could also strengthen the index's downside rigidity.
However, it remains to be seen whether the rebound in semiconductor stocks will lead to a trend reversal. Recently, domestic semiconductor stocks have experienced increased volatility driven more by supply-demand dynamics and investor sentiment than by actual performance or demand. Additionally, news of Apple testing memory chips from China's Changxin Memory Technologies (CXMT) adds uncertainty to the memory supply chain.
As the U.S. stock market has reached new highs following the employment slowdown, it is uncertain whether the domestic market will follow suit with the same strength, as this will depend on foreign investor activity. Given the significant foreign selling in semiconductor stocks last week, the key question will be whether foreign investors return to large semiconductor stocks today, which will determine the improvement in the supply-demand environment.
Considering that the U.S. CPI, a key event this week, is approaching, today is likely to be a day for confirming the direction of semiconductor supply-demand, interest rates, and oil prices rather than aggressive buying. If the CPI aligns with market expectations, it is likely to maintain a favorable environment for the stock market by not exacerbating interest rate concerns. Conversely, if inflation comes in higher than expected, it could lead to profit-taking pressures in the domestic market, coinciding with the valuation burdens of the recently peaked U.S. stock market.
* This article has been translated by AI.
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