[Good Morning Stock Market] Tech Stocks Fall Amid Rate Hike Concerns... Focus on Chairman Powell's Remarks

Nasdaq Index Falls 1.16% Amid Tech Stock Plunge
Watch for Profit-Taking in AI and Secondary Battery Stocks

On the 27th, the KOSPI is expected to start lower. This is because concerns about additional tightening have increased, and with the date of Federal Reserve (Fed) Chair Jerome Powell's public remarks on monetary policy approaching, caution is expected to be strong. The impact of the armed rebellion in Russia over the weekend on the stock market is expected to be limited.

Han Ji-young, Kiwoom Securities Researcher: “AI-related stocks and secondary battery stocks expected to decline amid cautious sentiment”

[Image source=Yonhap News]

On the 26th (local time), the Nasdaq index in the U.S. stock market fell more than 1.16%. This was because John Williams, President of the New York Federal Reserve Bank, emphasized the importance of stable inflation recovery ahead of Chair Powell's remarks on the 28th. Although he did not mention monetary policy, his reference to price stability strengthened concerns about tightening. Chair Powell plans to attend the ECB Forum in Portugal and engage in policy discussions with the ECB President, BOJ Governor, and BOE Governor.

By stock, AI-related stocks such as Nvidia (-3.7%) and Microsoft (-1.9%) showed weakness due to profit-taking in the U.S. stock market. Concerns about interest rate hikes have increased, and since mid-month, AI-related semiconductor stocks have been taking a breather. There are also concerns that a bubble has formed in AI, increasing the risk of stock price declines. As major U.S. AI stocks continue to weaken, related domestic stocks are also expected to be affected. A decline in secondary battery stocks should also be prepared for. Tesla's stock fell about 6% after Goldman Sachs downgraded its investment rating due to margin deterioration caused by intensified industry competition.

Park Sang-hyun, Hi Investment & Securities Researcher: “Semiconductor inventory reduction and export recovery are necessary”

For the domestic stock market to rise further, improvement in the semiconductor industry and export conditions is essential. If a sharp decline in semiconductor inventory and an improvement in export growth rate are confirmed, it will stimulate expectations for domestic economic improvement in the second half of the year, acting as additional momentum for the domestic stock market's rise.

To confirm improvement in the semiconductor industry, the inventory reduction in the semiconductor sector must be checked in the May Industrial Activity Trend report to be released on the 30th. In April, semiconductor inventory unexpectedly surged by more than 31% compared to the previous month, dampening expectations for industry improvement. The expected production cut effect did not materialize. Therefore, the inventory adjustment and production reduction in the semiconductor sector for May, to be announced this week, are important. These indicators are expected to serve as a critical turning point for the semiconductor stock price trend, which has shown a significant upward trend so far.

To confirm export recovery, the June export-import trend report to be released on the 1st of next month is important. Exports from the 1st to the 20th showed better-than-expected performance. The trade deficit was about $1.6 billion, significantly lower than the $4.3 billion deficit recorded from the 1st to the 20th of the previous month. Since export prospects for heavy industry, chemical, and steel sectors are expected to improve significantly from the third quarter, with export growth rates expected to trend upward, a signal confirming export recovery is needed.