[Seoul Pre-Market Briefing] October 1, mixed performance due to oil price instability, Micron’s performance is good

PCE was below expectations, but the New York stock market was mixed due to a resurgence in oil prices and interest rates.

Micron's performance and guidance both exceeded expectations... Pay attention to domestic semiconductor supply and demand

Key Market Trends

① PCE falls below expectations… The probability of an interest rate increase in October is 37%.

PCE in August rose 0.3% compared to the previous month and 3.4% compared to the previous year, falling below market expectations of 0.4% and 3.7%.

Core PCE was also 0.2% compared to the previous month and 3.0% compared to the previous year, which was lower than the expected 0.3% and 3.3%.

Personal income increased by 0.2% and expenditures increased by 0.9%, lowering the price burden, while consumption was stronger than expected.

With the addition of New York Fed President John Williams' cautious remarks, the probability of an interest rate hike in October, which exceeded 70% at the beginning of the week, fell to 37%.

However, there is also analysis that this PCE includes the effect of changes in the calculation method for some items, so the extent of the price slowdown needs to be watched a little more.

② Oil prices rise above $90 again... 10-year note 5.29%

International oil prices rose 1.16% to $90.42, exceeding $90 again.

A larger-than-expected decline in U.S. gasoline and refined oil inventories stimulated oil prices while negotiations between the U.S. and Iran failed to make clear progress.

On the other hand, the increase in crude oil exports from oil-producing countries in the Middle East, such as Saudi Arabia, is a factor limiting the rise in oil prices.

U.S. Treasury yields fell immediately after the PCE announcement, but rose again, reflecting strong consumption, employment and growth indicators, and rising oil prices.

The 10-year government bond interest rate rises to 5.29%, putting pressure on the stock market.

③ Micron performance/guidance exceeds expectations

Micron's performance announced after the close exceeded market expectations.

Sales were $54.2 billion, exceeding the forecast of $51 billion, and EPS was $33.42, exceeding the forecast of $31.60.

The sales forecast for the next quarter was $61.5 billion, higher than the market forecast of $57 billion, and the EPS forecast was $38.15, higher than the $35.40 expected.

Even before the earnings announcement, major semiconductor stocks such as Micron, AMD, and Intel rose.

Micron's performance and guidance reaffirm that the memory industry is continuing to boom.

The Man's Perspective

Among the major variables the market was waiting for this week, Micron's performance and PCE were revealed. First of all, the numbers themselves are not negative. Micron's performance and guidance both exceeded expectations, and its PCE was also lower than market expectations.

However, PCE was not enough to significantly change the existing interest rate outlook. As oil prices rose again, the 10-year U.S. Treasury bond yield also rose to 5.29%. Considering that crude oil exports from the Middle East have recently increased, it is necessary to check whether oil prices stabilize again.

In the domestic stock market, the supply and demand of Samsung Electronics and SK Hynix are ultimately important. Micron's strong earnings may strengthen expectations for the memory industry, but we also need to see if any profits are sold after the earnings announcement. The fact that Share Buybacks have entered the final stage may also affect the supply and demand of the two stocks.

As KOSPI entered oversold territory early in the week, the price burden has also eased considerably. As we are digesting major events one by one, it is time to look at whether the stock market continues, focusing on September's leading stocks and policy- and investment-related stocks rather than the index.

Today's checkpoint

Semiconductor stocks: Changes in supply and demand for Samsung Electronics and SK Hynix after Micron’s good performance

U.S. Treasury yield: 10-year yield rose to 5.29% even though PCE was below expectations

International oil prices: Oil prices exceed $90 again and progress in Middle East negotiations

Supply and demand of large-cap stocks: Changes in supply and demand following the conclusion of Samsung Electronics·SK Hynix Share Buybacks

key indicators

Dollar Index 101.48 (+0.11%)

International oil price $90.42 (+1.16%)

Volatility Index 16.34 (+1.87%)

US 10-year Treasury bond interest rate 5.29%

MSCI Korea Index -2.31%

Night Futures -0.48%

Source: Market Man’s Stock Story t.me/shmstory

YouTube: Sihwangman TV www.youtube.com/@blueoak1004

This article was rewritten from Shihwangman's Stock Story Telegram post with the author's consent. All content may contain errors and cannot be used as a basis for buying or selling as it is not a recommendation to buy or sell. The content of this post cannot be used as legal basis under any circumstances.