[Good Morning Stock Market] 'Hawkish Fed' Volatility Expansion... Samsung Electronics in a 'Waiting Game' Market

US Federal Reserve Officials' Hawkish Remarks Lead to New York Stock Market Decline
Tonight's US Employment Data and Samsung Electronics Earnings to Impact Market Variables

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] The U.S. stock market started higher on the 6th (local time) amid hopes that the Federal Reserve's (Fed) tightening pace could be adjusted due to weak employment data, but it closed lower as hawkish remarks from Fed officials continued. The Dow Jones Industrial Average fell 1.25%, while the S&P 500 and Nasdaq declined 1.02% and 0.68%, respectively.

On the same day, Neel Kashkari, President of the Minneapolis Fed, dampened market sentiment by stating, "It is too early to consider pausing rate hikes as we have yet to see evidence that core inflation in wages and services is coming down." Fed Governor Lisa Cook also said, "It is necessary to keep rates at restrictive levels until there is confidence that inflation is moving toward the 2% target."

◆ Seo Sang-young, Researcher at Mirae Asset Securities = The fact that Fed officials actively dismissed expectations of policy changes by the Fed in the U.S. stock market led to an expansion in the rise of the dollar and interest rates, which is a burden on the Korean stock market. In particular, the continued possibility of increased volatility in the UK financial market is also a factor dampening overall investor sentiment. Additionally, although partially reflected the previous day, Moody's claim that memory semiconductor operating profits will sharply decline in the second half of the year has increased the likelihood of poor performance in related stocks in the Korean stock market.

Attention should be paid to Samsung Electronics' earnings announced on this day. Since the number of investment firms with a positive outlook on next year's semiconductor market is increasing, even if a slowdown in earnings is announced, it is expected to have little impact as it has already been priced in. Considering this, the Korean stock market is expected to start down about 0.5%, but a stock-specific market is anticipated as investors await Samsung Electronics' earnings announcement and the U.S. employment report released in the evening.

◆ Han Ji-young, Researcher at Kiwoom Securities = Amid weakness in the U.S. stock market, caution over the U.S. employment data (scheduled for 9:30 PM tonight) and profit-taking following midweek gains are expected to lead to a cautious market. Also, semiconductor stocks have risen for four consecutive days due to the anticipation of bad news being priced in and recognition of a price bottom. Samsung Electronics' preliminary Q3 earnings (operating profit consensus about 11.9 trillion KRW), scheduled for today, is expected to be an event that gauges the sustainability of this trend. Attention should also be paid to LG Electronics' earnings results (operating profit forecast about 870 billion KRW), which could influence investor sentiment in other IT sectors excluding semiconductors.

The MSCI Korea Index ETF rose 0.76%, while the MSCI Emerging Markets ETF fell 0.6%. Eurex night futures declined 0.67%, and the 1-month NDF USD/KRW rate was 1,407.73 KRW. Reflecting this, the USD/KRW exchange rate is expected to start about 5 KRW higher.