U.S. semiconductor stocks fell sharply overnight, and international oil prices rose, leading to expectations of a weak start for the domestic stock market on October 23. However, following a more than 3% drop in the KOSPI the previous day, some analysts suggest that perceptions of excessive declines may attract bargain hunters, potentially mitigating intraday losses.
On October 22, the three major indices on the New York Stock Exchange closed mixed. The Dow Jones Industrial Average rose by 0.02%, while the S&P 500 and the Nasdaq Composite fell by 1.21% and 2.60%, respectively. Notably, the Nasdaq recorded its largest drop since June.
The semiconductor sector was particularly weak, with the Philadelphia Semiconductor Index plummeting by 6.72%. Major companies such as Micron (-6.26%), Nvidia (-4.40%), and Intel (-8.04%) experienced significant declines, while SK Hynix's American Depositary Receipts (ADRs) and SanDisk fell by 8.07% and 8.51%, respectively.
Concerns over the profitability of AI investments have pressured technology stocks overall. Meta reported a negative free cash flow for the third quarter, and Tesla lowered its capital expenditure outlook, raising investor caution. Despite solid corporate earnings and real demand for AI, doubts have resurfaced about whether companies can sustain profitability and cash flow amid substantial investment costs.
Additionally, rising international oil prices due to heightened geopolitical tensions in the Middle East have dampened risk appetite among investors. Brent crude futures on the London ICE closed at $113.17 per barrel, up 4.00% from the previous trading day. West Texas Intermediate (WTI) for December delivery also rose by 2.39%. The Houthi rebels in Yemen, aligned with Iran, have claimed renewed attacks on key facilities in Saudi Arabia, increasing concerns over oil supply disruptions.
However, some analysts argue that the recent adjustments in the U.S. stock market should not be interpreted as a broad deterioration in economic performance. Seo Sang-young, an executive at Mirae Asset Securities, stated, "Despite the sharp drop in the Nasdaq, the proportion of rising stocks within the market remains high, and corporate earnings along with real demand for AI are still robust. Furthermore, the decline in Treasury yields has eased valuation pressures somewhat. Therefore, the current adjustment appears more as a reassessment of excessive investment expectations centered on AI and debt-driven business models rather than a reflection of overall economic downturns."
The domestic stock market is also expected to be influenced by the weakness in U.S. tech stocks. As of 8:13 a.m., shares of Samsung Electronics were down 3.73%, and SK Hynix fell by 2.04% in the NXT pre-market. Following the KOSPI's 3.52% drop the previous day, the combined impact of weak U.S. semiconductor stocks and rising oil prices may continue to exert downward pressure on semiconductor shares.
Nonetheless, there is potential for some recovery during the trading session. Han Ji-young, a researcher at Kiwoom Securities, noted, "The domestic market is expected to open lower due to concerns over credit risks related to Meta and the burden of rising oil prices. However, the negative impact from Meta has likely been partially priced into the domestic market already, and the perception of overselling remains valid. Therefore, we anticipate that the market will absorb early selling pressure and recover some of its losses during the session."
Factors influencing semiconductor investment sentiment have also emerged. SK Hynix announced that it has decided to halt its review of a potential initial public offering (IPO) for Solidigm, citing a comprehensive assessment of capital market conditions and various funding options for expanding production capacity and enhancing competitiveness. One analyst suggested that this announcement regarding the suspension of Solidigm's IPO review could positively impact semiconductor investment sentiment.
* This article has been translated by AI.
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