[Good Morning Stock Market] "Dow Index Hits All-Time High... KOSPI Eyes Nvidia Earnings Announcement"

Seokhwan Kim, Researcher at Mirae Asset Securities

The Korean stock market is expected to be slightly down on the 27th. Although the US Dow Jones Industrial Average hit an all-time high supported by strength in the energy and financial sectors, caution is expected ahead of Nvidia's earnings announcement.

Last night in the New York stock market, the Dow closed at a record high of 41,240.52, up 65.44 points (0.16%) from the previous trading day. The S&P 500, focused on large-cap stocks, fell 17.77 points (0.32%) to 5,616.84, and the tech-heavy Nasdaq dropped 152.03 points (0.85%) to 17,725.76.

There was strong selling pressure in the semiconductor sector, including Nvidia (-2.3%), Broadcom (-4.1%), and Super Micro Computer (-8.3%). Needham & Company downgraded Micron (-3.8%) citing expectations of stagnant chip shipments in the fall and lowered its price target from $150 to $140. Additionally, cybersecurity solutions provider Alum Technologies (-30%) saw a sharp stock price decline due to a drop in Q2 profits, dampening investor sentiment.

The market is focusing on Nvidia's Q2 earnings on the 28th (local time). Nvidia accounts for more than 80% of the global AI chip market. Analysts suggest that this earnings report will be a key indicator of whether the AI-driven rally that has led this year's US stock market will continue.

When Nvidia announced its Q1 FY2025 results (February to April 2024), it provided Q2 FY2025 (May to July 2024) revenue guidance of $28 billion. Wall Street expects a higher figure of $28.6 billion.

If the results meet expectations, the stock price is expected to surge significantly the day after the earnings announcement. However, this also means that even a slight underperformance could cause Nvidia's stock to falter, potentially impacting the entire semiconductor sector.

The Korean stock market is also expected to grow cautious while awaiting Nvidia's earnings report. Seokhwan Kim, a researcher at Mirae Asset Securities, said, "The MSCI Korea Index ETF fell 1.7%, and the MSCI Emerging Markets Index ETF dropped 0.8%. We expect high levels of cautious observation until Nvidia's earnings are confirmed."

Meanwhile, the offshore non-deliverable forward (NDF) 1-month won-dollar exchange rate is at 1,326 won, and the won-dollar exchange rate reflecting this is expected to start 5 won lower compared to the previous day.