[Good Morning Market] All Eyes on SK Hynix Earnings... KOSPI Expected to See Supply-Demand Tug-of-War

On October 29, the KOSPI is expected to see a tug-of-war between buyers and sellers around the 4,000-point mark. This is because SK Hynix, a key driver of the recent KOSPI rally, is scheduled to announce its earnings. The market sentiment is anticipated to shift depending on SK Hynix's results.

On this day, the KOSPI will be influenced by several factors: the positive momentum from Nvidia, SK Hynix's earnings announcement, investor caution ahead of the US Federal Open Market Committee (FOMC) meeting, and the performance outlook for the Magnificent 7 (M7, the seven major tech stocks). As a result, investors are expected to engage in a wait-and-see game.

According to industry sources, Jensen Huang, CEO of Nvidia, is reportedly considering a dinner meeting with Lee Jae-yong, Chairman of Samsung Electronics, and Chung Euisun, Chairman of Hyundai Motor Group, on October 30. In addition, Nvidia's cumulative order backlog surpassing 500 billion dollars is also seen as a positive factor for the market.

SK Hynix's earnings are also a major focus for investors. Since October, foreign investors have been net sellers of SK Hynix shares, offloading 3.4 trillion won. This was largely due to increased concerns after the stock price surged by 50% since October. However, if the third-quarter results announced today exceed market expectations, there is a possibility that buying momentum may return.

Hong Jiyeong, a researcher at Kiwoom Securities, analyzed, "The main points to watch in this earnings report are the extent of any earnings surprise and how positively the company presents its outlook for high-bandwidth memory (HBM) demand and improvements in the legacy business during the conference call."

Hong further explained, "Even if the earnings are at least neutral, the fact that the market must digest results from US hyperscalers, the FOMC meeting, and the US-China summit all between Thursday and Friday increases the difficulty of short-term market responses." She added, "The point at which foreign investor volatility in both the semiconductor sector, including SK Hynix, and the broader domestic stock market stabilizes is likely to come after next week."

Meanwhile, on October 28 (local time), all three major New York stock indexes hit record highs. This was driven by continued optimism about artificial intelligence (AI) innovation, led by Nvidia.

On the New York Stock Exchange, the Dow Jones Industrial Average closed at 47,706.37, up 161.78 points (0.34%) from the previous session. The S&P 500 rose 15.73 points (0.23%) to 6,890.89, while the tech-heavy Nasdaq Composite gained 190.04 points (0.80%) to close at 23,827.49.

Nvidia, the company with the largest market capitalization, surged 4.98% in a single day, driving the indices higher. This came after Nvidia hosted its semiannual developer conference (GTC) in Washington, DC, announced support for AI supercomputers at US Department of Energy research labs, and unveiled plans to promote the construction of sixth-generation (6G) communication networks in the United States.

Among the Magnificent 7 companies, five-including Microsoft, Apple, Alphabet, Amazon, and Meta-are set to begin announcing their earnings starting on October 29. Renewed optimism about these companies' earnings and their continued AI investments also supported the rise in the indexes.