[Seoul Pre-Market Brief] October 26th: A Crucial Week for South Korea's Markets

Big Tech earnings, FOMC, and Samsung Electronics and SK Hynix's performance in focus this week as domestic market direction is at stake. Micron, AMD, and SK Hynix ADR rise despite WTI breaking $103, with eyes on the semiconductor rebound's sustainability.

Key Market Trends

• ① WTI breaks $103: U.S. market retreat as defensive stocks falter under surging oil prices.

Over the weekend, U.S. markets retreated under the weight of a surging oil market.

A notable departure from previous trends, even the major defensive stocks that had shown resilience during recent market jitters, faltered.

Energy, tech, and real estate were the only sectors to rise, with the majority of other industries experiencing declines.

WTI crude oil prices surged past $103 per barrel, nearing highs last seen during the Iran war.

Geopolitical tensions escalated as Iran hinted at potential counterattacks amid ongoing discussions of a U.S. strike.

With attacks on vessels in the Strait of Hormuz rising to 28 since October, President Trump also suggested the possibility of a prolonged conflict.

As expectations of an early end to the war wane, sustained upward pressure on oil prices persists.

② Semiconductor Stocks Rebound Despite Oil Surge: SK Hynix ADR Climbs

Amid a broader market weakness, key semiconductor stocks such as Micron, AMD, and SK Hynix ADR rose.

The news of SK Hynix's decision to halt its Solidigm listing, which was seen as a potential drag on shareholder value, was well-received and helped ease concerns.

Additionally, Jensen Huang's comments downplaying the likelihood of a memory market oversupply boosted investor sentiment.

Semiconductor stocks, which had undergone significant adjustments due to AI investment costs and funding concerns, continued to attempt individual rebounds.

The rise in semiconductor stocks despite the oil surge and market weakness highlights the potential for a shift in market dynamics ahead of Samsung Electronics and SK Hynix's earnings this week.

③ Super Week Ahead: Samsung, SK Hynix Earnings to FOMC

This week marks a busy period with several key domestic and international events.

Samsung Electronics and SK Hynix will report their earnings, followed by the earnings of US Big Tech companies and the FOMC meeting.

This period provides an opportunity to assess the actual corporate performance and outlook, shedding light on the recent market turmoil caused by AI investment and profitability debates.

The Impact of Rising Oil Prices on Monetary Policy

The rapid increase in international oil prices has emerged as a new burden for policymakers. Should this inflationary pressure persist, it could influence the Federal Reserve's policy decisions, making the post-FOMC interest rate movements a critical factor to monitor. It is essential to observe if the U.S. Treasury yields, which had declined in October, will reverse course.

Market Outlook

One of the most crucial events on the domestic stock market calendar this week is the earnings announcement from SK hynix. While the results are expected to be favorable, investors have become increasingly sensitive to the surrounding changes rather than the numbers themselves.

In the U.S. market, the focus has shifted from AI company earnings to capital expenditures, cash flow, and funding methods. The controversy surrounding investment costs for AI data centers is ultimately linked to memory demand, so it is vital for SK hynix to address these concerns during its conference call. Additionally, investors will be keenly observing the company's stance on shareholder returns and any further developments regarding Solidaim.

SK hynix's Sharp Decline and Market Outlook

SK hynix has experienced a significant drop, with its share price falling approximately 60% from recent highs. This decline is unprecedented in the last 20 years, excluding the financial crisis period. As we approach the earnings announcement, it is crucial to monitor any changes in supply and demand dynamics, starting today.

Last week, we witnessed a notable increase in selling pressure in both the KOSDAQ and KOSPI mid-cap stocks. The overall market movement has slowed down as funds that had flowed into these stocks as an alternative during the large-cap adjustment process are now exiting. It is essential to observe whether the defense of the KOSPI 5,500 level can serve as a turning point and if the lackluster KOSDAQ will see a spread of buying momentum.

Considering the upcoming schedule and fund flows, there is a likelihood of continued high volatility in the near term. Factors such as the decline in customer deposits, limited pension fund inflows, and foreign selling pose challenges. However, the recent sharp decline has significantly reduced price burdens, making it necessary to keep an eye on the movements of existing leading stocks, institutional buying accumulations, and sectors expected to show improved earnings.

Today's Key Focus Areas

Semiconductors: Will the rebound in Micron, AMD, and SK Hynix ADRs translate into gains for domestic large-cap semiconductor stocks?

Oil Prices: With WTI surpassing $103, the focus turns to the Middle East's geopolitical situation and the potential for further upside.

SK Hynix: Pre-earnings supply dynamics and expectations around shareholder returns and Solidaim-related developments.

KOSPI Index: Can the benchmark hold above the critical 5,500 level, which it defended multiple times last week?

Super Week: Earnings from Samsung Electronics, SK Hynix, and Big Tech, along with the FOMC's rate decision, will shape market sentiment.

Source: Shi Huang Man's Stock Story t.me/shmstory

YouTube: Shi Huang Man TV www.youtube.com/@blueoak1004

This article has been reconstructed with the consent of Shi Huang Man's Stock Story. All content may contain errors and is not intended as a buy or sell recommendation, nor should it be used as a basis for investment decisions. The content of this post cannot be used as legal evidence under any circumstances.