After Handshakes Between Leaders, It's Time for Corporate Earnings... What to Watch in October's Stock Market [Click e Market]

Lingering Burden of Oil Prices and Interest Rates Despite U.S.-China Tariff Truce Extension

Focus Shifts to Micron's Earnings and Outlook

Spotlight on Cash-Generating Power of AI Memory

U.S. President Donald Trump

Handshakes between heads of state are a welcome sight for the stock market, as they temporarily ease concerns about escalating conflicts or higher tariffs. However, such gestures alone do not directly translate into increased corporate revenues and profits. This is why analysts emphasize that investors' attention should be focused on the earnings reports companies are about to release.

On September 29, Kim Dueon, a researcher at Hana Securities, stated in a report that market interest is expected to shift from diplomatic expectations to corporate earnings next month. The United States and China have agreed to extend their current trade truce, which was set to expire on November 10, by another two months until January 10 of next year. While this reduces the immediate risk of confrontation, core tariffs and disputes over advanced technology remain unresolved until subsequent negotiations.

Although both countries have agreed in principle to recommend preferential tariffs on non-sensitive items worth 30 billion dollars each, an actual reduction in tariffs has not yet been finalized. In other words, diplomacy has bought time for negotiators, but it does not mean there has been an agreement to immediately lower companies' costs.

Other lingering concerns in the market include oil prices and interest rates. Ongoing transportation disruptions in the Middle East could push up not just crude oil prices but also diesel and logistics costs, further fueling inflation. Although some export volumes have recovered, risks in the Strait of Hormuz have not disappeared, according to analysts. From the perspective of businesses, the environment remains one where they must closely monitor their materials procurement and product transportation costs.

The divergence between the interest rates projected by the U.S. Federal Reserve (Fed) and the market is also regarded as a key point to watch. The Fed raised its benchmark interest rate by 0.25 percentage points this month, setting it at 3.75~4.00 percent per year. If the gap between the Fed's and the market's rate path persists and inflation accelerates, both a spike in long-term bond yields and a higher discount rate for equities could occur simultaneously.

The industry highlighted by researcher Kim is artificial intelligence (AI) memory. This approach seeks to confirm optimism about strong sales of semiconductors for AI through tangible profits and cash flow. The nearest opportunity to check this will be on October 1 (Korean time), when Micron Technology is scheduled to announce its fiscal fourth quarter earnings. The report could also provide clues about the circumstances for domestic companies operating in the same memory market.

Micron had previously projected around 50 billion dollars in sales for the quarter in question as of June. Its adjusted free cash flow of 18.3 billion dollars in the previous third quarter demonstrated its ability to invest even with high interest rates. What matters more is the outlook for the following quarter: it is critical to verify whether demand for high-bandwidth memory (HBM) continues, check the pricing and sales volume for general DRAM, and determine whether the company maintains surplus cash even after increasing facility investments. Kim added, "If Micron confirms persistent demand for HBM and DRAM, as well as stable profit and cash flow projections for the next quarter, the strategy of steadily accumulating stocks of this era remains unchanged for the mid to long term."

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