[Good Morning Market] Hesitant Despite End of Longest Shutdown... All Eyes on Nvidia Earnings

Fed Rate Cut Expectations for December Fade
AI Bubble Concerns Add Pressure... All Eyes on Nvidia's Earnings
Foreign Investors Exit, Korean Stock Market Plunges
"Semiconductor Profit Momentum Remains Solid"

Last week, the U.S. stock market showed mixed results. Although the U.S. government emerged from its longest-ever shutdown (temporary suspension of government work), concerns over an artificial intelligence (AI) bubble and hawkish (monetary tightening-oriented) remarks from Federal Reserve officials fueled market volatility.

With Nvidia set to announce its earnings on the 19th (local time), both the U.S. and Korean stock markets are on high alert. Analysts point out that changes in foreign investor flows in the Korean market also warrant close attention.

On November 14, the New York stock market closed mixed following a sharp decline the previous day. The technology-heavy Nasdaq rebounded by 0.13%, while the S&P 500 index (-0.05%) and the Dow Jones Industrial Average (-0.65%) both weakened.

During the session, major AI companies such as Nvidia (1.8%), Micron Technology (4.2%), and Palantir (1.1%) managed to rebound, but the momentum that had driven gains for several months appeared to have weakened. Not only has the burden of overvaluation increased, but concerns over profitability, debates about the application of depreciation periods, bubble speculation, and issues related to private credit loan funding structures have grown, limiting the recovery of stock prices.

The market is closely watching Nvidia's earnings, which will be released after the close of the New York market on the 19th. The key question is whether its quarterly results and guidance will exceed existing market expectations. Attention is also focused on whether Nvidia can offset revenue losses caused by export restrictions to China and present an outlook for demand for its main graphics processing units (GPUs), including the Blackwell series.

The fading expectations for a Federal Reserve rate cut in December are also expected to be a variable. As economic indicators such as the September non-farm payrolls, which have been delayed for more than a month, are set to be released on the 20th, rate cut prospects could become even more uncertain. This is why the minutes of the Federal Open Market Committee (FOMC), which will be released on the same day as Nvidia's earnings, are drawing attention.

The Korean stock market, which also faltered last week, is tense. On November 14, the KOSPI closed at 4,011.57, plunging 3.81% from the previous day. The KOSDAQ also fell 2.23% over the same period, ending at 897.90. In particular, growing net selling by foreign investors in the main market heightened anxiety. On that day alone, foreign investors sold about 2.3668 trillion won, marking the largest single-day net selling amount this year.

However, some believe it is premature to view this level of net selling as a signal of the end of the bull market. Han Ji-young, a researcher at Kiwoom Securities, explained, "This is more in line with profit-taking in semiconductor stocks amid the AI bubble debate," adding, "Unlike past black swan risks such as financial system collapse or COVID-19, what we are seeing now is merely an accumulation of short-term speed and overvaluation concerns, while the profit momentum for KOSPI, led by semiconductors, remains solid."