[Good Morning Market] U.S. Weakens Ahead of Micron Earnings... Korea Expected to Recover Losses

U.S. Markets Fall Across the Board

Asian Semiconductor Slump Contributes to Losses

Korea Expected to Rebound on Bargain Hunting After Plunge

The U.S. stock market closed lower due to a sharp plunge in Asian semiconductor stocks and a wait-and-see sentiment ahead of Micron's earnings announcement. The domestic stock market is expected to start higher on June 24, supported by bargain hunting following the previous day's steep decline.

Yonhap News Agency

On June 23 (local time) in the New York stock market, the Dow Jones Industrial Average ended trading at 51,666.84, down 45.81 points (0.09%) from the previous session. The S&P 500 Index fell by 107.33 points (1.44%) to 7,365.46, and the Nasdaq Composite Index dropped 579.56 points (2.22%) to close at 25,587.04.

As semiconductor stocks in Asia—including Korea, Japan, and Taiwan—plummeted, U.S. semiconductor stocks such as Micron (-13.2%) and SanDisk (-13.7%) also experienced sharp declines. In addition, anticipation surrounding Micron's earnings report slated for June 24 and the U.S. Personal Consumption Expenditures (PCE) price index announcement scheduled for June 25 further contributed to the prevailing wait-and-see sentiment, amplifying the bearish tone.

Ji Young Han, a researcher at Kiwoom Securities, analyzed, "While the mid-term growth narrative for semiconductor stocks remains valid, driven by the continued potential of artificial intelligence (AI) investment and expectations of rising memory prices, in the short term, these stocks are facing pressure from elevated valuation levels."

As of June 22, before the correction, the S&P 500 and Nasdaq had posted returns of -1.7% and -3.4%, respectively, from June 1 to June 22. However, during the same period, the Philadelphia Semiconductor Index had gained 12.9%. Among them, the DRAM Exchange-Traded Fund (ETF), comprised of memory companies, achieved a return of 18.7% over that period. Kiwoom Securities assessed that this provided incentives for profit-taking and mechanical portfolio rebalancing in semiconductor stocks.

The domestic stock market is expected to rebound, recovering losses from the previous day's plunge. This outlook is based on the perception that the sharp decline in semiconductor stocks has already been reflected in the U.S. stock market, leading to technical and bargain buying following the sell-off.

The impact of Korea's exclusion from the Morgan Stanley Capital International (MSCI) Developed Markets (DM) Index is expected to be limited. This is because the market had already anticipated this outcome, as evidenced by the results of the annual market accessibility review released on June 19, in which Korea received negative assessments in five categories, including foreign exchange market liberalization and the English-language disclosure system.

The previous day, the KOSPI closed down 9.99% at 8,203.84, marking the fifth largest single-day drop since 1996. However, analysts say that the nature of the plunge was different from previous episodes, attributing it primarily to the concentrated positioning in Samsung Electronics and SK hynix.

A researcher commented, "It is difficult to attribute this plunge to external shocks; rather, it is reasonable to see it as an adverse effect of the increasingly severe concentration in semiconductor stocks, which has caused supply and demand distortions in both the spot and derivatives markets. Given the heightened difficulty of responding in the current situation, a split buying strategy focusing on traditional leading sectors—such as semiconductors, securities, banking, electric equipment, retail, and defense—is likely to be more effective."

This content was produced with the assistance of AI translation services.