U.S. Semiconductor Stocks Plunge, Iran Airstrikes... KOSPI Expected to Open Lower [Good Morning Market]

New York Stocks Hindered by Surging Oil Prices
KOSPI Reacts Only to Negatives
Too Soon to Call It a Downward Trend

The U.S. stock market closed lower across the board due to a sharp decline in semiconductor stocks and uncertainty surrounding the Strait of Hormuz. The domestic stock market is also expected to open lower.

On the 7th, the KOSPI index and the closing prices of SK Hynix and Samsung Electronics were displayed on the status board in the dealing room of Hana Bank in Jung-gu, Seoul. Photo by Yonhap News

On July 7 (local time), the Dow Jones Industrial Average closed at 52,925.15, down 130.76 points (0.25%) from the previous session. The S&P 500 Index closed at 7,503.85, down 33.58 points (0.45%), and the tech-heavy Nasdaq Composite Index finished at 25,818.69, down 302.47 points (1.16%) from the previous session.

The decline in Samsung Electronics' stock price also affected the New York stock market. Intel and Micron shares fell by 9.7% and 4.7%, respectively. KLA, Marvell Technology, Broadcom, AMD, and others also saw simultaneous declines. There are growing concerns in the market that the recent rally in semiconductor stocks may have been excessive. Morgan Stanley noted that the upward momentum for semiconductor stocks is weakening as investors are shifting toward relatively underperforming sectors, including hyperscalers (large-scale data center operators).

Renewed geopolitical tensions in the Middle East around the Strait of Hormuz also negatively impacted investor sentiment. News that three ships passing through the Strait of Hormuz were attacked in succession sent international oil prices surging. The settlement prices for September Brent crude futures and August West Texas Intermediate (WTI) crude futures rose 3.01% and 2.76% from the previous session to $74.16 and $70.44 per barrel, respectively. This marks the largest increase since June 1. Additionally, news that the U.S. government will end sanctions waivers on Iranian oil further fueled the oil price increase in after-hours trading. Concerns that rising oil prices could stoke inflation led to a decline in U.S. Treasury prices. The yield on the 10-year U.S. Treasury note climbed by 7 basis points (1bp = 0.01 percentage points) to 4.54%.

The U.S. Central Command announced that, in response to Iran’s attacks on merchant ships in the Strait of Hormuz, it launched powerful airstrikes against Iran. On social media platform X, U.S. Central Command stated, "We have launched a series of powerful airstrikes to exact a heavy price for targeting merchant vessels with innocent civilians aboard in international waters," adding that "Iran’s attacks are not only dangerous but also a clear violation of the ceasefire."

With geopolitical risks and the global tech stock downturn overlapping, domestic investor sentiment is also cooling. In particular, the recent extreme volatility in the KOSPI, which saw three instances of the sidecar mechanism and one circuit breaker triggered, has led to a tendency for the market to interpret even positive news as negative or as a signal of a market peak. In fact, even though Samsung Electronics' preliminary operating profit for the second quarter exceeded market consensus (forecasts), unmet expectations among some investors with higher hopes, issues related to provisions, and concerns over potential foundry losses have all come to the fore, fueling 'sell-on-earnings' behavior and anxiety about a profit peak-out. There is also growing skepticism regarding the long-term supply agreements (LTAs) and the trend of rising memory prices, which had previously driven the revaluation of semiconductor stocks.

Ji-Young Han, a researcher at Kiwoom Securities, stated, "Today, external risk factors will cause volatility to be high from the start of trading in the domestic market." She added, "However, the sharp decline in U.S. semiconductor stocks has already been reflected, and bargain hunting following the series of declines since July is expected to provide resilience to the index, leading to attempts at a rebound during the session." Han further noted, "It is premature to equate index volatility with a clear direction," explaining, "For a full-fledged shift into a downward trend, signals such as profit peak-out and earnings declines in the next quarter would need to materialize, but those signs have not yet emerged."

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