[Good Morning, Stock Market] KOSPI Takes Another Shot at 7,000... U.S. CPI, Chip Earnings to Set Direction

The KOSPI, which plunged more than 5% last week amid heavy net selling by foreign investors, is expected to attempt a rebound this week. The U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) for September, movements in U.S. market interest rates, and earnings from major U.S. financial firms and semiconductor companies such as ASML and TSMC are seen as key factors that will determine the direction of the domestic stock market. In particular, the extent to which forecasts for next year's earnings at Samsung Electronics and SK hynix are revised upward is expected to determine the strength of the KOSPI's recovery.

Last week, the KOSPI fell 5.39% to close at 6,625.93 as foreign investors recorded net sales of more than KRW 6.4 trillion. Samsung Electronics announced preliminary third-quarter operating profit that exceeded market expectations, but weakness persisted, led by large-cap semiconductor stocks. The impact of concerns over a supply-demand gap following options expiration, exchange-traded fund (ETF) rebalancing and the end of share buybacks was compounded by Middle East risks, pushing up international oil prices and U.S. long-term Treasury yields.

After opening this week in line with the performance of U.S. markets over the holiday period, domestic stocks are expected to find direction based on U.S. inflation and interest rate movements. With the yield on the U.S. 10-year Treasury fluctuating in the 5.2% to 5.3% range, the U.S. September CPI, due on October 14, is expected to be a key event for the macroeconomic environment.

Markets expect U.S. headline CPI and core CPI to rise 3.6% and 2.5%, respectively, year over year in September. Since expectations that both figures will be higher than August's 3.4% and 2.4% have already been largely priced in, inflation concerns could instead ease if the actual figures come in line with consensus.

Third-quarter earnings from U.S. companies are another variable. Results from financial firms such as JPMorgan, Goldman Sachs and Citigroup will provide insight into not only net interest income and loan-loss provisions, but also demand for corporate loans and profitability in investment banking. With AI-related companies continuing to raise large amounts of capital, a key point to watch is whether financing conditions for these companies remain stable despite the high-interest-rate environment.

In the semiconductor sector, ASML and TSMC are scheduled to report earnings. Key indicators for ASML include new orders for extreme ultraviolet (EUV) equipment and memory makers' capital investment plans, while those for TSMC include semiconductor demand, capacity utilization and changes in capital expenditures (CAPEX). Analysts say that confirmation of increased AI investment and rising customer orders in these companies' results could also boost investor sentiment toward the domestic semiconductor value chain.

One of the most important factors for the domestic stock market this week is the change in earnings estimates, particularly for Samsung Electronics and SK hynix. Although Samsung Electronics' preliminary third-quarter results exceeded market expectations, its share price fell, shifting market attention from the earnings improvement itself to the sustainability of future profits.

As of October 8, the consensus forecast for Samsung Electronics' 2027 operating profit stood at KRW 555 trillion, up about KRW 9 trillion from KRW 546 trillion on October 2. Over the same period, the estimate for SK hynix rose to KRW 401 trillion from KRW 400 trillion. The consensus forecast for 2027 operating profit across the entire KOSPI market also increased to around KRW 1,336 trillion from KRW 1,327 trillion. The upward revisions to earnings forecasts, which had been stagnant since September, are a factor supporting the market's downside.

"This is the point at which the extent of upward revisions to 2027 earnings estimates for Samsung Electronics and SK hynix, which analysts will begin updating in earnest through reviews starting this week, and the strength of corresponding upward revisions to earnings estimates across the KOSPI as a whole become important," said Han Ji-young, a researcher at Kiwoom Securities. He added, "Even if the market is exposed to macroeconomic uncertainties, including concerns over the U.S. September CPI and volatility in the U.S. 10-year Treasury yield, it needs to maintain the index's downside resilience and keep open a path to recovery toward the upper 6,000-point range."

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