New York Stock Exchange, Weekly Mixed Tide ‘Inflation and R Fears Calm Down’…Nvidia and Other Semiconductor Stocks to Watch This Week [이완수의 글로벌마켓 핫이슈]

This week, the US stock market is expected to show increased volatility. Last week, the index showed a mixed trend, with weekly 5,648.40 (0.24%) and 17,713.62 (-0.92%). Macro indicators have stabilized. The preliminary GDP growth rate for the second quarter was revised upward to 3.0%. In addition, the July PCE indicator also slowed to 2.5%. However, the market was negatively affected by the sharp drop in the stock price of Nvidia (NASDAQ:) despite good performance and upward guidance, which fell short of investors’ expectations. It plunged -6.3% the day after the after-hours announcement, recording $117.59. However, it recovered to $119.37 on the 30th due to expectations of low-price buying. Accordingly, semiconductor stocks Broadcom (NASDAQ:), Qualcomm (NASDAQ:), Intel (NASDAQ:), AMD (NASDAQ:), Applied Materials (NASDAQ:), and Micron Technology (NASDAQ:) were greatly shaken. The Philadelphia Semiconductor Index recorded a weekly decline of -1.34%.

On the other hand, the financial, REIT, infrastructure, and pharmaceutical/bio sectors maintained their strength due to expectations of a base rate cut. The upward trend of the consumer goods sector was also noticeable as expectations of increased consumption also increased. Defense stocks also continued to show strength as geopolitical risks in the Middle East increased. On the 4th of this week, HP Enterprise, Dollar Tree, GameStop, and C3.ai will announce their performance. On the 5th, Broadcom will also announce its performance following Nvidia. Depending on the performance, it seems that the theory of AI overproduction and the outlook for increased consumption in the second half of the year will be possible. In addition, it is expected that the outlook for the rate cut will be released based on the announcement of labor market indicators. If a low-price buying trend occurs due to Nvidia’s reevaluation, the financial market is expected to stabilize.

The weekly increase was 3.911%. As economic indicators slowed and stabilized, concerns about recession and inflation debate were erased. However, the prospect that the September FOMC meeting could be a baby step of 25bp cuts in the benchmark interest rate pushed up Treasury yields again. The cuts are expected to be readjusted again based on the job openings and employment reports released this week. Considering the recent macro situation of slowing economic growth and inflation, yields are expected to stabilize in the mid-3% range for the time being.

The Chinese stock market is expected to see increased expectations for government stimulus measures this week. Last week, the Shanghai Composite Index and Hong Kong HSCEI were 2,842.21 (-0.43%) and 6,331.14 (1.80%), respectively. The August manufacturing PMI announced on the 30th was 49.1, falling short of the market forecast of 49.5, but the service PMI was 50.3, exceeding the market forecast of 50.0. Expectations for increased consumption have increased. In addition, news that the sovereign wealth fund Chongyang Huijin Investment purchased a large amount of CSI300 Index ETF in the first half of this year also had a positive effect on the market. Expectations for the government’s stock market stimulus measures have also increased. However, the fact that the EU began implementing an increased tariff rate of 10% on Chinese electric vehicles from the current 10% to 27.0-46.3% for each company on the 1st has had a negative effect on the market.

This week, on the 2nd, the August manufacturing PMI will be released, and on the 4th, the service industry PMI will be released. On the 6th, the August export and import index will also be released. It seems that there will be a reaction to the economic slowdown depending on these indicators. The stock market is maintaining strength, centering on financial stocks, infrastructure, and IT sectors, as the possibility of additional cuts in the People’s Bank of China’s benchmark interest rate increases. In addition, consumer goods stocks are also rising as expectations for increased consumption in the 4th quarter increase. If the government’s fiscal and monetary policies focus on stimulating consumption, the market is expected to gain momentum.

The Korean stock market is expected to follow the U.S. stock market this week as well. Last week, KOSPI and KOSDAQ fell to 2,674.31 (-1.01%) and 767.66 (-0.72%), respectively. Foreigners sold a net 2.095 trillion won in the weekly market, dragging down the index. It felt like it was in sync with the U.S. economic indicators and Nvidia stock price that announced its performance. In particular, the domestic semiconductor industry reacted greatly to concerns about AI overproduction. Major AI semiconductor stocks such as Samsung Electronics (KS:), SK Hynix (KS:), Hanmi Semiconductor, and Hana Micron fell significantly.

On the other hand, stocks related to pharmaceuticals and biotechnology, defense, shipbuilding, renewable energy, and cosmetics maintained their strength due to the strengthening of the won, expectations of a base rate cut, expectations of increased consumption, and increased risks in the Middle East. The August CPI will be released on the 3rd of this week. The preliminary GDP growth rate for the second quarter will be announced on the 5th. On the 1st, it was announced that the trade balance in August increased by 11.4% for exports and 6.0% for imports compared to the previous year. The domestic stock market is expected to react this week to the movements of semiconductor stocks based on Nvidia’s stock price, the won/dollar exchange rate, expectations of a base rate cut, and geopolitical risks in the Middle East.

The yield on 10-year Korean government bonds rose to 3.091% for the week. It remained in the 3% range. Although the Bank of Korea froze the key interest rate, the Bank of Korea was largely analyzed as not being able to easily cut the key interest rate in September due to the increase in household debt, the increase in government debt, and the deterioration of real estate PF. In addition, the US Treasury yield rose, and it was in line with this. Considering the current domestic inflation and the US Federal Reserve’s stance, the domestic government bond yield is expected to remain in the early 3% range for the time being.

currency market

(DXY) reversed to a weekly gain of 101.70. After the Jackson Hole meeting, Chairman Powell strongly mentioned the pivot of monetary policy, which led to the dollar’s weakness. However, last week, the dollar showed signs of strengthening as the base rate cut was likely to be a baby step of 25bp. The market is expected to be more wait-and-see as it awaits the release of the August employment data this week.

The weekly exchange rate rose to 1,339.0 won. Last week, the dollar temporarily strengthened, leading to the won’s weakness. The won’s strength was maintained at 1,330 won, as the Bank of Korea froze the base rate, but the dollar’s interest rate cut is expected to narrow the spread between currencies. Therefore, the trend of the dollar’s weakness and the won’s strength is expected to continue for the time being.

The weekly price fell sharply to $59,129.17. Despite Trump’s pledge to make the United States the cryptocurrency capital, the market is showing weakness. The market is of the opinion that there is an excessive supply in the market after the Fountain Cox event. According to the analysis of The Crypt, the cryptocurrency market is suffering from a significant oversupply, and the problem has been ongoing since June, and the selling pressure of BTC is expected to continue for several months. The Bitcoin price is expected to move in the range of $60,000 to $70,000 for the time being.

raw materials market

fell to $73.55 per barrel for the week. There is a high sense of burden over supply shortages due to the war in the Middle East and Ukraine. However, the opinion that the market is at high risk of oversupply again as the 1 million barrel per day reduction policy implemented by OPEC+ ends in October was reflected in the oil price. However, the market expects that it will maintain the $80 per barrel level considering the disruption of the EU region’s supply chain due to the war in Ukraine, expectations of a soft landing in China and the US, and OPEC+’s continued production reduction measures.

The weekly close was at $2,527.60 per ounce, down from the all-time high of $2,560.30 on August 29. Gold hedging demand remained high as the dollar weakened. Geopolitical risks in the Middle East remained high, and China continued to hoard gold. Given these variables, gold prices are expected to continue to rise as the ceiling has been breached.