Semiconductor stocks surged on Wall Street, sparking a swift rebound in investor sentiment before the Korean market opened. The June Consumer Price Index (CPI) came in below expectations, rekindling hopes for interest rate cuts. This has led to a flurry of bargain hunting in the domestic market, particularly in semiconductor stocks.
As of 8:20 a.m. (Korean time) on Wednesday, SK Hynix was trading at 2,074,000 KRW (about 1,389 USD) in the Next Trade pre-market, up 161,000 KRW (about 108 USD) (8.42%) from the previous session. SK Square also saw a 7.06% increase.
Samsung Electronics rose 5.51%, Samsung Electro-Mechanics 5.71%, Samsung Life Insurance 3.79%, and Samsung C&T 3.95%.
The 595 stocks traded in the pre-market averaged a 5.03% gain.
Overnight, Wall Street closed higher, driven by strong performances in tech and chip stocks. The Dow Jones Industrial Average edged up 9.63 points (0.02%) to 52,508.27, while the S&P 500 gained 28.25 points (0.38%) to 7,543.59. The Nasdaq Composite jumped 233.83 points (0.90%) to 26,107.01.
The U.S. Labor Department reported that June’s consumer prices rose 3.5% year-over-year, lower than the market’s 3.8% forecast.
CME’s FedWatch tool now shows an 83% chance of the Federal Reserve holding rates steady in July, up from 58% a day earlier.
U.S. semiconductor stocks rebounded strongly as investors snapped up perceived bargains. The Philadelphia Semiconductor Index climbed 2.54%, while the VanEck Semiconductor exchange traded fund (ETF) (SMH) rose 2.5%.
Notably, SK Hynix’s American Depositary Receipts (ADRs), which had plunged 9.3% the previous day, skyrocketed 27% to close at 193.92 USD, boosting optimism for Korean chip stocks.
Han Ji-young, an analyst at Kiwoom Securities, noted that the lower-than-expected U.S. June CPI has eased inflation worries. Following Kevin Warsh’s measured comments at the hearing, the 10-year Treasury yield has retreated to around 4.5%.”
Han added that while WTI crude still hovers near 80 USD a barrel, President Donald Trump’s quick pivot on Strait of Hormuz protection fees to potential trade deals with Middle Eastern nations suggests U.S.-Iran tensions may be a fleeting concern.
He concluded that given that the Korean market has seen its biggest correction since the financial crisis, further downside in current stock prices and valuations seems limited. The market’s trajectory is likely shifting towards recovery. Investors should consider increasing exposure to semiconductors and artificial intelligence (AI) infrastructure stocks, which have seen significant recent pullbacks.