“Focusing on geopolitics and macro insecurity”
a. On Friday, U.S. stocks weakened by 1% (Dow -1.0%; S&P 500 -1.5%; Nasdaq -2.0%) as the possibility of the U.S. sending Marines to the Middle East was also highlighted by Waller, Fed director’s hawkish comments amid the March FOMC aftershocks.
b. The NASDAQ fell below the 200-day mark, increasing anxiety over the long-term trend. The key is whether to keep the existing trend as it topped the 200-day mark again this week.
c. Although the news flow related to the Middle East crisis is still encouraging frequent trading in the market, it is appropriate to maintain a minimum basic position and respond with a wait-and-see or installment buying in the event of a sharp decline in stock prices
0.
This week, the KOSPI is expected to be affected by 1) the direction of U.S. market interest rates, 2) the news flow related to the U.S.-Iran war, 3) the U.S. consumer sentiment index and expected inflation in March, and 4) the semiconductor industry’s profit consensus rising (the weekly KOSPI expected range of 5,500-6,000pt).
1.
As a result of last Friday’s adjustment, the U.S. S&P 500 and Nasdaq fell below the 200-day mark for the first time in a year since March 25, showing increasing anxiety about damaging long-term trends.
The spread of risks of the U.S.-Iran war, such as energy inflation instability caused by soaring oil prices, has triggered a continuous correction in the U.S. stock market.
The fact that the FOMC was more hawkish than expected in March also appears to stem from geopolitical risks, with the U.S. 10-year interest rate soaring to around 4.4% during the day on Friday.
2.
Of course, Korea’s KOSPI has been doing better than the U.S. stock market, with its stock price rising again above the 20th-day mark in the recent rebound, and its downward rigidity is relatively high in terms of performance and valuation.
However, it is worth noting that the more likely the U.S. stock market, which is symbolic for the global stock market, is to deviate from the long-term trend, and the more the 10-year U.S. interest rate, which is a substitute for the stock market discount rate, continues to rise, the domestic stock market also has limitations in resisting external shocks.
In addition, as there is no unique event in the domestic stock market this week, it is judged that stock price sensitivity to exogenous variables such as war and macro should be high this week.
3.
The problem is that the direction of the development of the war situation is changing rapidly even during the weekend.
A case in point is Trump’s remarks, “We will talk early on the 21st, but we do not want a ceasefire.” -> “Very close to achieving the goal of military operations” in the afternoon of the 21st. -> On the 22nd, he frequently changed his position, saying, “If the Strait of Hormuz is not fully opened within 48 hours, we will attack Iranian power plants.”
Iran also seems to be sticking to a hard-line response line, noting that it will attack key facilities such as U.S. energy and IT if its power facilities are hit.
The same goes for concerns about the central bank’s hawkish policy shift.
Currently, the Fed’s first rate cut under the Fed Watch is far behind the FOMC in September 27 after the outbreak of war in June 26 and the FOMC in March.
In this regard, the negative sensitivity of the stock market to major Fed officials’ remarks scheduled this week, such as the University of Michigan consumer sentiment index in March, and other major events could increase.
This is because it is a material that can further confirm the aftermath of the Middle East war.
4.
Here, in addition to the learning effects of past wars, it is necessary to recall that both the United States and Iran are experiencing a decline over time in the real benefits of prolonged wars, such as spreading political burdens and facing limits on power loss.
Given this, even this week, war newsflow could inject short-term volatility in the stock market, coupled with central bank policy shift noise.
However, it is appropriate to maintain a minimum basic position and respond with a wait-and-see position or a split buy in the event of a sharp drop in stock prices, rather than responding to the news flow one by one by one.
5.
As mentioned above, there are no unique individual events scheduled in the domestic stock market, but it is necessary to pay attention to whether the semiconductor industry will raise its profit consensus further and the direction of foreign supply and demand.
After Micron’s earnings, which recorded an earnings surprise on Thursday last week, the possibility of a peak out of the memory industry has been raised, and in the process, price volatility of major domestic and foreign semiconductor stocks has increased.
However, the key is whether Samsung Electronics and SK Hynix’s 26-year operating profit consensus will be raised further in the week, as positive business opinions are still prevailing around foreign companies.
(As of the 20th, the operating profit consensus of Samsung Electronics and SK Hynix was KRW 198 trillion and KRW 164 trillion, respectively, up 8.0% and 5.1% from the end of February.)
It is reasonable to take the importance of whether or not the profit consensus changes is a material that can improve the supply and demand conditions of foreigners who made net sales of about 11 trillion won in the semiconductor industry in March.