[Good Morning Market] Golden Holiday Ends... Korean Stock Market Focuses on Q3 Earnings Season

On October 10, the domestic stock market is expected to open higher as it digests issues related to artificial intelligence (AI), exchange rates, and the U.S. government shutdown that emerged in major markets such as the United States during the holiday period.

Previously, on October 9 (local time), the New York stock market closed lower across the board as profit-taking sentiment strengthened ahead of third-quarter earnings announcements. The Dow Jones Industrial Average, focused on blue-chip stocks, fell by 243.36 points (0.52%) to 46,358.42. The S&P 500 Index, centered on large-cap stocks, dropped by 18.61 points (0.28%) to 6,735.11. The Nasdaq Index, which is tech-heavy, declined by 18.752 points (0.08%) to 23,024.626.

Reuters Yonhap News

Suh Sangyoung, a researcher at Mirae Asset Securities, commented, "During the holiday period, the U.S. stock market underwent changes due to various factors, including debates over a potential bubble in the AI industry and the strong expansionary tone of Jensen Huang, CEO of Nvidia." He added, "The fact that the Philadelphia Semiconductor Index rose by as much as 3.23% during the holiday is favorable for the Korean stock market. However, the weakening of the Korean won, with the won-dollar exchange rate exceeding 1,420 won, is a source of concern."

Despite concerns raised by some about an AI bubble, the U.S. stock market performed well during Korea’s extended holiday. Although there is ongoing debate about rotational investment among big tech (large information technology companies), most stock price gains are being supported by actual earnings, which experts say distinguishes the current situation from the dot-com bubble of the past.

Han Jiyoung, a researcher at Kiwoom Securities, stated, "Today, the domestic stock market is expected to open higher, having digested issues from the U.S. and other major markets during the holiday period in a neutral or better manner." She added, "While temporary price pullbacks may occur, considering upward factors such as AI momentum, it is advisable to respond with a buy-on-dip strategy during corrections."

As the market enters the full-fledged third-quarter earnings season, attention is focused on whether the domestic stock market can continue its existing semiconductor-driven rally. It is also noteworthy that the KOSPI has shown a pattern of increased downward pressure after the Chuseok holiday and the start of the third-quarter earnings season each year. Lee Kyungmin, a researcher at Daishin Securities, said, "The KOSPI range of 3,300 to 3,500 is a level-up zone driven overwhelmingly by semiconductors, so rotational trading based on price merit is possible." However, he advised, "Refrain from chasing rapidly rising sectors and reduce exposure."

The delay in the release of key economic indicators due to the U.S. federal government shutdown is also being closely watched. Kang Jinhyuk, a researcher at Shinhan Investment Corp., noted, "In a situation where confidence in AI and concerns about economic slowdown coexist, the earnings results of ASML and TSMC, which will determine whether the tech rally continues, as well as whether Samsung Electronics can achieve an earnings rebound, are important." He also emphasized, "Attention should be paid to the release of major indicators such as the U.S. Consumer Price Index (CPI) and retail sales."