[Good Morning Market] U.S. Stocks Rise on Semiconductor Rebound...Upbeat Outlook for Korean Market

Treasury Yields and Oil Prices Ease
Bargain Hunting in U.S. Semiconductor Stocks
Rising Optimism Spreads to Domestic Markets

On August 25 (local time), the main indices of the U.S. stock market rebounded across the board. Semiconductor stocks recovered, and a decline in U.S. Treasury yields helped restore stability to the markets.

On this day, the S&P 500 index closed regular trading at 7,677.28, up 0.32% from the previous day. The tech-heavy Nasdaq Composite Index also ended the session at 26,151.30, up 0.66% from the previous day. The Dow Jones Industrial Average also rose 0.30% to a closing value of 53,577.40.

This was attributed to several factors: the weak Conference Board Consumer Confidence Index for August, expectations regarding additional U.S. Treasury interventions in the bond market, a reduction in the possibility of military conflict and rising hopes for a ceasefire following the U.S. announcement of economic sanctions against Iran, all contributing to declines in both Treasury yields and oil prices. On this day, October Brent crude and U.S. West Texas Intermediate (WTI) crude futures dropped by 3.89% and 3.12%, respectively.

The Conference Board, a U.S. economic research organization, announced that the preliminary Consumer Confidence Index for August was 89.4 (based on 1985=100), a drop of 0.8 points from the previous month. High oil prices, increased living costs, and slowing employment were cited as the factors dampening consumer sentiment.

International oil prices also fell sharply after the U.S. announced economic sanctions against Iran. On the day, October Brent crude and U.S. West Texas Intermediate (WTI) crude each declined by 3.89% and 3.12%. U.S. Treasury yields also eased somewhat. The yield on the 10-year U.S. Treasury note fell by 6.5 basis points (bp; 1bp=0.01%) to 4.638% from the previous session. The 30-year yield dropped by 5.6bp to 5.174%. Both figures marked their lowest levels since August 5.

Additionally, a wave of bargain hunting spread among semiconductor stocks, which had recently been sold off. Micron Technology rose by 2.48%, Nvidia gained 2.19%, and AMD climbed 4.91%. Notably, Nvidia, which had plunged nearly 3% in the previous session, ended higher for the first time in eight trading days.

Jiyoung Han, a researcher at Kiwoom Securities, interpreted the situation by highlighting that, despite a recent series of sharp rate hikes, the magnitude of corrections in major markets has not been significant, implying that investors' preference for equities remains intact. Han explained, "This suggests that even in a structurally high interest rate environment, arising from increased issuance of government and corporate bonds, the threshold for market rates to trigger substantial corrections in the stock market is rising. Rather than assuming falling interest rates, investors are accepting high rates as the base scenario, while still assigning high relative attractiveness to equities."

Expectations for a rally are also spreading to the domestic market. The MSCI Korea ETF, a key barometer linked closely to domestic stock movements, rose by 3.75%. The MSCI Emerging Markets ETF and the Philadelphia Semiconductor Index increased by 1.72% and 1.44%, respectively.

Although volatility in the domestic market remains high, analysts suggest that resilience is improving. Han added, "While the KOSPI initially plunged over 4% the previous day, it managed to recover all its losses and rebound. Despite net foreign selling exceeding 3.8 trillion won, domestic retail and institutional investors absorbed these sales. Supported by improvements in external conditions, the domestic stock market is expected to show an upward trend."

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