[Good Morning Market] KOSPI Expected to Rise Led by Semiconductors... Optimism Continues After Chuseok

On October 2, the domestic stock market is expected to open higher, led by semiconductor stocks, supported by hopes for an interest rate cut, despite the temporary shutdown of the U.S. federal government.

The previous day, the domestic stock market closed higher for both major indices, as expectations for third-quarter earnings were boosted by news that September exports reached their highest level in three and a half years, despite caution over the upcoming long holiday. In particular, foreign capital flowed into sectors with strong export performance, such as semiconductors and shipbuilding, and a similar trend is expected to continue today.

On the afternoon of the 1st, the KOSPI index was displayed on the status board in the dealing room of Hana Bank headquarters in Jung-gu, Seoul. On that day, the KOSPI closed at 3455.83, up 31.23 points (0.91%) from the previous trading day. Photo by Yonhap News

Lee Sunghoon, a researcher at Kiwoom Securities, stated, "We expect the market to start higher, led by semiconductors, reflecting the sharp rise in Micron (up 8.8%) and the surge in the Philadelphia Semiconductor Index (up 2.05%)." He added, "As the session progresses, we anticipate increased volatility in market liquidity as investors are likely to increase their cash holdings ahead of the long Chuseok holiday."

Researcher Lee also believes that the upward momentum in the domestic stock market, driven by semiconductors, will continue. He said, "Sam Altman, CEO of OpenAI, recently requested 900,000 high-bandwidth memory (HBM) DRAMs for the Stargate project, and both Samsung Electronics and SK Hynix are establishing comprehensive partnerships to build core AI infrastructure. This is expected to sustain buying interest centered on semiconductors."

There is also analysis suggesting that, even if the U.S. stock market undergoes a correction during the Chuseok holiday due to the shutdown, it could act as a favorable factor for the domestic market.

Kim Jihyun, a researcher at Daol Investment & Securities, explained, "Even if the U.S. market corrects after today, the KOSPI may avoid a sharp decline during the holiday period. If government data releases are suspended due to the shutdown, or if mass layoffs occur as former President Donald Trump has predicted, expectations for an accommodative response from the Federal Reserve at the Federal Open Market Committee (FOMC) meeting on October 28-29 could drive the market higher."

Meanwhile, overnight in New York, despite the U.S. federal government shutdown, both the Dow Jones Industrial Average and the S&P 500 Index reached new all-time highs.

On October 1 (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 46,441.10, up 43.21 points (0.09%) from the previous trading day. The large-cap S&P 500 Index rose 22.74 points (0.34%) to 6,711.20, while the tech-heavy Nasdaq Index gained 95.15 points (0.42%) to close at 22,755.16.

Investors largely expected that, as in previous cases, the impact of the first federal government shutdown in seven years on the real economy would be limited. Historically, shutdowns have typically ended within one to two weeks and had only a limited effect on the economy.

On this day, the government announced that private sector employment fell far short of expectations, deteriorating to a shockingly low level. However, the stock market responded by strengthening expectations for an interest rate cut. In particular, expectations regarding tariffs on pharmaceuticals also helped lift the market.

On this day, Eli Lilly, the largest pharmaceutical company in the United States, surged 8.18%. Pfizer also posted gains of over 6% for a second consecutive day. Merck rose 7.39% after climbing 6.81% the previous day. After Pfizer announced it would lower the prices of some drugs and invest $70 billion in the U.S., securing a three-year tariff exemption, optimism spread across the pharmaceutical sector.