[Good Morning Stock Market] US Stocks Fall on Target and Micron Shock... KOSPI Sectoral Divergence Expected

Opening and Closing of Suneung Day Delayed by One Hour Each

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Myung-hwan Lee] On the 17th, the domestic stock market is expected to show a differentiated flow by industry amid a weak trend.

On the 16th (local time), the U.S. New York stock market fell due to the poor earnings of major retailer Target and Micron's semiconductor production cut announcement. The Dow Jones Industrial Average closed at 33,553.83, down 0.12% (39.09 points) from the previous trading day. The S&P 500 index fell 0.82% (32.94 points) to 3,958.79, and the tech-heavy Nasdaq index ended at 11,183.66, down 1.54% (174.75 points).

On the day of the 2023 College Scholastic Ability Test (CSAT), the opening of the KOSPI, KOSDAQ, and KONEX markets will be delayed by one hour. According to the Korea Exchange, the regular trading hours of the domestic stock market on this day will be from 10:00 AM to 4:30 PM.

The pre-market trading session will also be shifted by one hour, changing from 9:00 AM to 10:00 AM. However, the single-price and large-volume/basket trading sessions after market close will start one hour later, but the closing time remains at 6:00 PM.

Sang-young Seo, Head of Media Content Division at Mirae Asset Securities: "U.S. Semiconductor Stocks Weakness... Domestic Stock Market Expected to Show Industry Differentiation"

[Image source=Reuters Yonhap News]

On the 17th, the domestic stock market is expected to start down about 0.7% and then see differentiated sector movements similar to the previous day’s U.S. market, with a rebound buying momentum entering the market.

The U.S. stock market showed weakness centered on individual sectors, such as the Philadelphia Semiconductor Index dropping 4.26% amid growing concerns about economic slowdown, which is expected to negatively impact the domestic market. Particularly, the economic slowdown issue, which is most burdensome to export-dependent Korea, and the negative outlook on the semiconductor industry triggered by U.S. Micron are factors that dampen overall investor sentiment.

Despite the weak dollar, the won-dollar exchange rate is expected to rise by about 10 won, indicating won weakness, which will likely burden foreign investor demand. Although U.S. retail sales were solid, some detailed items such as electronics and department stores were weak, signaling a negative economic outlook, and industrial production contraction has increased concerns about future export declines to the U.S., adding to the pressure.

However, it is positive that Nvidia and Cisco Systems showed strength after their earnings announcements following market close.

Ji-young Han, Researcher at Kiwoom Securities: "U.S. Consumption Slowdown and Dollar Strength Impact... KOSPI Expected to Show Downtrend"

On the 17th, the domestic stock market is expected to show a weak trend influenced by the U.S. stock market decline, concerns about slowing U.S. consumption affecting Korean export performance, and the strength of the dollar.

Concerns about economic damage in the actual industry are gradually increasing, as seen in Target, a discount retailer whose stock price plummeted due to reduced customer spending amid a worsening macro environment, and Micron, which hinted at further production cuts due to excess inventory and weak front-end demand. Although U.S. retail sales in October were strong, consumer goods companies started discount events from autumn, or consumers may have advanced their year-end spending considering inflation-driven price increases.

The consumption slowdown strengthens expectations for the Federal Reserve (Fed) to slow the pace of tightening. However, there is about a month left until the December Federal Open Market Committee (FOMC) meeting, where the actual pace adjustment and the final interest rate can be confirmed through the dot plot. Therefore, at least for the remainder of November, the overall market sentiment is expected to be influenced by Fed-related macro issues as well as year-end consumption season factors.

From an industry perspective, as major semiconductor stocks such as Intel and AMD sharply fell due to the negative impact from U.S. Micron, investment sentiment for semiconductor-related stocks in the domestic market is also expected to weaken.