As the domestic stock market grapples with significant declines, attention turns to whether it can find a path to recovery on July 30. This follows a tumultuous period marked by a drop in U.S. markets, soaring long-term Treasury yields, and geopolitical risks in the Middle East.
On July 29, all three major U.S. stock indices fell sharply. The Dow Jones Industrial Average dropped 2.19%, marking its largest decline in 15 months since April 2022. The S&P 500 index fell by 1.52%, while the tech-heavy Nasdaq Composite declined by 1.74%.
Semiconductor stocks continued to struggle, with SK Hynix's American Depositary Receipts (ADRs) down 2.6%. Micron Technology saw a significant drop of 9.94%, and SanDisk fell by 7.32%.
The U.S. Federal Reserve held its benchmark interest rate steady at 3.50% to 3.75% during its Federal Open Market Committee (FOMC) meeting. However, long-term Treasury yields surged, with the yield on 30-year U.S. Treasuries reaching 5.21%, the highest level since July 2007.
Results from major tech companies were mixed. Microsoft reported a revenue increase of 18% year-over-year for its fiscal fourth quarter (April to June), totaling $90 billion, exceeding market expectations of $87.62 billion. In contrast, Meta Platforms fell short of market expectations for earnings per share (EPS) and provided a disappointing outlook for the third quarter.
Han Ji-young, a researcher at Kiwoom Securities, noted, "Today, the domestic market is likely to face pressure from the July FOMC, geopolitical uncertainties, and mixed stock performance from Microsoft and Meta."
Despite the recent steep declines, some analysts are hopeful for a rebound. Market attention is focused on Samsung Electronics' second-quarter earnings report and conference call scheduled for today. Samsung had previously announced preliminary second-quarter results of 171 trillion won in revenue and 89.4 trillion won in operating profit on July 7, with detailed divisional results expected today.
Investors are particularly interested in the conference call's content, including specifics on long-term supply contracts, the company's perspective on memory supply shortages, outlook for the second half of the year, and shareholder return plans. The previous day, SK Hynix's record earnings failed to alleviate concerns about market conditions during its conference call, leading to continued sell-offs in semiconductor stocks.
The domestic market has experienced significant declines over the past two days, severely dampening investor sentiment. The KOSPI closed down 360.42 points (5.98%) at 5,663.24. After starting the day with over a 1% gain, it reversed course and fell sharply. The KOSDAQ index also turned negative after an initial rise, closing at 662.68.
As the sell-off continued, the securities market triggered its 15th circuit breaker and the ninth of the year. The KOSDAQ also activated its 14th circuit breaker and fourth of the year. This marks the first time both markets have simultaneously triggered circuit breakers for two consecutive days.
As of 8:44 a.m., in the NXT pre-market, Samsung Electronics was down 1.1%, and SK Hynix fell 3.7%.
One analyst commented, "Given the oversold conditions, we expect to see volatility in early trading followed by an attempt to rebound. The fact that July's returns are down 33%, marking the lowest monthly return on record, signals oversold conditions and a potential bottoming out."
They added, "It is important to note that while negative narratives surrounding semiconductors are forming due to profit peak-outs and the end of the AI investment cycle, there has not yet been a deterioration in fundamentals."
* This article has been translated by AI.
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