Concerns are rising in the South Korean stock market as speculation mounts over a potential 50 basis point interest rate hike by the U.S. Federal Reserve. The KOSPI index may fall below the 5,000 mark.
The U.S. Consumer Price Index (CPI) for October exceeded market expectations, prompting comments from Federal Reserve Governor Christopher Waller that fueled speculation about a rate hike.
Before the CPI announcement, Waller stated, "If the core CPI rises around 0.3% or more, stronger policy measures may be necessary." The actual core CPI met Waller's conditions, intensifying concerns about tightening monetary policy.
According to Reuters, the likelihood of a December rate hike, as indicated by the Chicago Mercantile Exchange's FedWatch tool, surged from 84% to nearly 100%. The probability of a 0.5% increase also rose to 9.1%.
Controversy surrounding Jensen Huang, CEO of NVIDIA, continues to unfold. Allegations have emerged regarding Huang's inappropriate relationship with a woman accused of being a Chinese spy, raising national security concerns over the sale of advanced semiconductors to China. This has led to calls from the Republican majority in Congress for investigations into Huang and NVIDIA, as well as for stricter export controls on semiconductors to China.
Major semiconductor stocks have also shown weakness. Micron fell by 1.1%, SK Hynix American Depositary Receipts (ADRs) dropped by 3.51%, and SanDisk declined by 2.99%. NVIDIA saw a significant drop of 5.47%, following a previous decline of 4.27% in the last trading session.
The Philadelphia Semiconductor Index decreased by 0.36%, while the MSCI Korea ETF fell by 2.05%.
As of 8:37 a.m., KOSPI's leading stocks are trending downward in pre-market trading. After maintaining above the 5,230 level the previous day, Samsung Electronics and SK Hynix are down 1.36% and 1.40%, respectively, in pre-market trading.
Seo Sang-young, an executive at Mirae Asset Securities, stated, "The Korean stock market is expected to open lower due to a surge in government bond yields leading to profit-taking. The heightened possibility of a 50 basis point rate hike by the Fed in December is likely to trigger profit-taking after yesterday's sharp rise."
Han Ji-young, a researcher at Kiwoom Securities, analyzed, "Today, the domestic market is likely to give back some of the gains from yesterday's 4% rise due to the U.S. October CPI exceeding market expectations, rising U.S. 10-year bond yields, and the fallout from the Jensen Huang-related NVIDIA controversy."
* This article has been translated by AI.
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