[Good Morning Stock Market] "US Stock Market Plunges... KOSPI Expected to Start Lower"

Micron Drops in After-Hours
Downward Pressure Grows on Domestic Semiconductor Stocks

As the US stock market plunged, the domestic stock market is also expected to face downward pressure on the 19th. Due to Micron's stock price falling more than 10% in after-hours trading, domestic semiconductor stocks are also expected to decline.

After four consecutive trading days of gains following the impeachment political turmoil, the domestic stock market is taking a breather, while Bitcoin, the leading cryptocurrency, touched $107,800 intraday, continuously hitting all-time highs. The photo shows the Bitcoin price displayed on the electronic board at the Upbit Customer Center in Gangnam-gu, Seoul, and the KOSPI index shown on the electronic board in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. Photo by Heo Yeonghan and Kang Jinhyeong.

The three major indices of the US New York stock market all closed lower on the 18th (local time). On that day, the Dow Jones Industrial Average, centered on blue-chip stocks, closed at 42,326.87, down 1,123.03 points (2.58%) from the previous trading day. The Dow index has fallen for 10 consecutive trading days from the day after it first surpassed 45,000 earlier this month, marking the longest losing streak in 50 years since 1974. The S&P 500, focused on large-cap stocks, fell 178.45 points (2.95%) to 5,872.16, and the Nasdaq, centered on tech stocks, plunged 716.37 points (3.56%) to close at 19,392.69.

The US Federal Reserve's (Fed) hawkish rate cut worsened investor sentiment. On that day, the Fed announced after its last Federal Open Market Committee (FOMC) meeting of the year that it decided to cut the federal funds rate for the third consecutive time from 4.5-4.75% to 4.25-4.5%. Fed Chair Jerome Powell's reiteration during the press conference that the pace of future rate cuts would slow also chilled investor sentiment.

Hwang Sanhae, a researcher at LS Securities, said, "Stocks that had recently rallied as part of the Trump trade, including Tesla (-8.3%) and cryptocurrency-related stocks, plunged sharply, and Bitcoin also fell more than 3% after the FOMC decision. When Chair Powell expressed skepticism about Bitcoin reserves in his speech, expectations for policies under the second Trump administration weakened."

Influenced by the US stock market, the domestic stock market is also expected to start lower that day. Han Ji-young, a researcher at Kiwoom Securities, said, "Due to the more hawkish-than-expected December FOMC, the sharp drop in the US stock market, the surge in the dollar-won exchange rate, and Micron's after-hours stock price plunge, the domestic stock market is expected to start lower today. However, considering that the market has already priced in various domestic and external negative factors throughout the fourth quarter, leading to downward rigidity in valuation, and that the exchange rate remains in the high 1,400 won range, which could have a positive effect on exporters, the volatility of stock prices may increase, but the pressure to lower the index level is expected to be limited," she analyzed.

She particularly advised that around the KOSPI 2,400 points level, it is appropriate to respond with staggered buying focused on export stocks and shareholder return sectors (such as finance).

Kim Ji-won, a researcher at KB Securities, said, "Signs of inflation rebound and easing concerns about weakening employment led the Fed to significantly revise its monetary policy next year, and uncertainty about the interest rate path caused the US stock market to plunge. Accordingly, the elevated interest rate level and strong dollar are expected to weigh on the domestic stock market as well, so caution is needed regarding the possibility of intensified selling pressure."