[Good Morning Stock Market] US Semiconductor Guardrail Holds Strong... "KOSPI Expected to Start Higher"

A researcher is presenting an MPW test chip in the 12-inch semiconductor testbed cleanroom at Daejeon Nano Comprehensive Technology Institute. Photo by Jinhyung Kang, Daejeon aymsdream@

On the 25th, the Korean stock market is expected to start with a slight rise. Although Federal Reserve (Fed) officials in the U.S. made hawkish remarks, the market is expected to be more influenced by the 0.79% increase in the Philadelphia Semiconductor Index.

On the 22nd (local time), the Dow Jones Industrial Average closed at 33,963.84, down 0.31% from the previous session. The Standard & Poor's (S&P) 500 index fell 0.23% to 4,320.06, and the Nasdaq index closed down 0.09% at 13,211.81. The Dow fell 1.9% last week, while the S&P 500 and Nasdaq dropped 2.9% and 3.6%, respectively.

Two days after the Fed held its benchmark interest rate steady at 5.25?5.50% on the 22nd (local time), Fed officials delivered hawkish comments. Michelle Bowman, a Fed Governor, attending a regional bank event in Colorado, stated, "I expect additional rate hikes will be necessary to bring inflation back to the 2% target in a timely manner."

[Image source=Yonhap News]

Mary Daly, President of the Federal Reserve Bank of San Francisco, also said at an event hosted by the Greater Phoenix Leadership, "I think the likelihood of inflation falling to 2% in 2024 is low," and emphasized, "We must continue doing what we have been doing to truly fulfill our mission."

Susan Collins, President of the Boston Fed, and Neel Kashkari, President of the Minneapolis Fed, also expressed support for continued tightening at separate events. The hawkish stance of Fed officials could weigh on the U.S. economy, which is negative for the Korean stock market given its high export dependence.

However, the 0.79% rise in the Philadelphia Semiconductor Index despite declines in major indices is favorable. This is because the U.S. Department of Commerce announced a semiconductor chip final rule, reducing uncertainty. Additionally, some easing measures, such as removing the clause that defined significant transactions as those under $100,000 presented in March, are also viewed positively.

Sangyoung Seo, Head of Media Content at Mirae Asset Securities, said, "Expectations for policies to stabilize the financial market, such as the Chinese government's easing of foreign investment limits, remain a factor improving investor sentiment," adding, "Considering this, the Korean stock market is expected to start with about a 0.3% rise, followed by differentiation among stocks."