Oil Prices Rise, Semiconductor Stocks Sell Off... Will South Korean Stocks Fall for a Fifth Straight Session? [Good Morning Stock Market]

U.S. markets hit by geopolitical tensions and weakness in tech stocks
KOSPI support level gives way amid foreign investor selling
Hopes for a technical rebound as earnings roll in

U.S. crude prices rose and selling of memory semiconductor stocks continued, leaving the three major U.S. stock indexes mixed at the close. Attention is also focused on whether the South Korean stock market will extend its losing streak to five consecutive trading days.

The KOSPI and other indices are displayed on a board in the dealing room at Hana Bank headquarters in Jung-gu, Seoul, on the 12th. Yonhap News Agency

On Oct. 12 (local time), the Dow Jones Industrial Average rose 195.60 points (0.38%) from the previous session to close at 51,850.55. The S&P 500 fell 4.30 points (0.06%) to 7,807.24, while the Nasdaq Composite dropped 120.27 points (0.44%) to 27,245.90.

Geopolitical tensions escalated after an attack on Riyadh Airport in Saudi Arabia, sending international oil prices higher for a third consecutive day. December-delivery Brent crude rose 1.84% from the previous session to $106.65 a barrel, while November-delivery U.S. West Texas Intermediate (WTI) crude gained 2.06% to close at $93.74.

Memory semiconductor stocks were particularly weak. News that China's ChangXin Memory Technologies (CXMT) had advanced its DRAM technology and would introduce next-generation products for servers within the year weighed on the market. The Philadelphia Semiconductor Index fell 2.60%, Micron Technology dropped 3.88%, and SK hynix American depositary receipts (ADRs) lost 4.02%. Nvidia, Broadcom and AMD also fell by around 2% each.

Market participants remain cautious as they watch major financial firms begin reporting earnings in earnest this week, along with the release of key economic indicators, including September's consumer price index (CPI) and producer price index (PPI).

Meanwhile, the KOSPI has fallen for four consecutive trading days. According to the Korea Exchange on Oct. 12, the index closed at 6,384.24, down 241.69 points (3.65%) from the previous trading day. It was the first time the KOSPI had closed in the 6,300 range since Aug. 11, about two months ago, and its steepest percentage decline since Sept. 2, when it fell 3.99%. Foreign investors were net sellers of KRW 2.025 trillion worth of shares on the main board, extending their selling streak to five consecutive trading days. Foreign investors have sold a net total of about KRW 199 trillion worth of shares on the main board this year. After briefly easing in July and August, their selling picked up again in September, reaching KRW 21.5 trillion.

Kiwoom Securities said the recent weakness in semiconductor stocks had made the market more sensitive to news such as CXMT's entry into the next-generation memory market. It noted that uncertainty over future earnings had weakened investor sentiment, even though CXMT's products have yet to be validated in terms of mass-production success, yields, performance or customer certification.

However, the KOSPI has plunged about 9% over the past four trading days and fallen to around its 200-day moving average, leading the brokerage to conclude that conditions for a short-term technical and valuation-driven rebound have taken shape. It said the index could enter a recovery phase if macroeconomic uncertainty eases and earnings reports improve earnings visibility.

Han Ji-young, a researcher at Kiwoom Securities, said, "At this point, it makes sense to keep open the possibility of a rebound in the index on the perception that it has fallen too far, followed by some easing of macroeconomic and earnings uncertainty this week through the release of the U.S. September CPI and earnings reports from ASML and TSMC, stabilization in foreign investor flows, and a resumption of the index's recovery." She added, "Given this, rather than joining the sell-off, a staggered buying strategy focused on major sectors such as large-cap semiconductor stocks and materials, components and equipment (MCE) stocks, which have suffered a sharp chain of declines despite favorable earnings outlooks, is effective."

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