[Good Morning Stock Market] US Stock Market Decline and Semiconductor Weakness... Korean Stock Market Also Expected to Weaken

Han Ji-young, Kiwoom Securities Researcher

The Korean stock market is expected to show weakness on the 31st. This is because the semiconductor sector wavered in the U.S. stock market overnight, causing major indices to fall across the board. The U.S. Department of Commerce announced that the third-quarter economic growth rate was more robust than expected, and employment indicators also showed solid performance. Meanwhile, the earnings announcements of key domestic companies leading the Korean stock market, such as Samsung Electronics and EcoPro, are scheduled, making this a point of interest.

On the 30th (local time) in the New York stock market, the Dow Jones Industrial Average closed at 42,141.54, down 91.51 points (0.22%) from the previous trading day. The S&P 500 index fell 19.25 points (0.33%) to 5,813.67, and the Nasdaq index dropped 104.82 points (0.56%) to 18,607.93.

The U.S. stock market was shaken by fatigue at the highs, the Magnificent 7 (M7) earnings, and rising bond yields. The weakness in the semiconductor sector was particularly notable. Nvidia fell 1.36%. Semiconductor company AMD closed down 10.62% as its fourth-quarter revenue outlook failed to meet investor expectations. Super Micro Computer, which had been under suspicion of accounting fraud, plunged 32.68% after the accounting firm responsible for its audit resigned, raising doubts about the company's credibility.

On the same day, the U.S. Department of Commerce announced that the preliminary GDP growth rate for the third quarter (July to September) was 2.8% annualized. Economists had forecast an average of 3.1%. Private employment also came in better than expected. According to Automatic Data Processing (ADP), private sector employment in the U.S. increased by 233,000 in October compared to the previous month. Although the U.S. GDP was lower than expected, it was evaluated as showing a solid trend. With strong employment figures in October, expectations are growing that the robust growth trend will continue.

The Korean stock market is expected to focus on the earnings of Samsung Electronics, EcoPro Group, and others on the 31st. Samsung Electronics will disclose detailed earnings by business division, but the stock price has already reflected the preliminary results. Therefore, personnel outcomes and future business directions are expected to influence investor sentiment.

The outflow of foreign investors from the domestic stock market is also a burden. Korea Zinc suddenly announced a rights offering the previous day, hitting the lower limit price, which negatively impacted the market. The KOSDAQ trading volume fell to around 4.7 trillion won as of the previous day.

Han Ji-young, a researcher at Kiwoom Securities, forecasted, "To thaw the frozen supply and demand situation, issues such as the financial investment income tax, the U.S. presidential election, and the earnings season may extend until mid-November, so a market environment with frequent turnover even among large-cap stocks is expected to continue for the time being."