As market volatility increases amidst high interest rates, including the US 10-year Treasury yield surpassing 5%, interest rate decisions and dot plots emerge as key factors for market direction.
The US 10-year Treasury yield has once again surpassed 5%, becoming a major market variable. Along with this, discussions about adjusting the pace of AI-related investments have emerged, increasing the importance of the macro environment.
The rapidly changing interest rate issue is currently a key factor exacerbating market volatility.
The maintenance of economic growth has a greater impact on the market than interest rate hikes themselves. There have been instances in the past where the stock market rose during periods of interest rate hikes before the financial crisis.
Currently, Korea's GDP growth rate is projected at 3.5%, and the US is also maintaining a solid trend with 4.4% growth in Q3.
A bearish divergence signal, where higher highs in the MACD oscillator are declining, has appeared. This trend is similarly observed in the Won/Dollar exchange rate and the Dollar Index.
While the 10-year bond yield continues to rise, the upward momentum is gradually weakening.
These technical indicators suggest that the upward momentum in bond yields is slowing down.
The current healthy economy and growth rates are largely supported by AI. Whether the actual launch speed of AI-related products slows down will be the primary concern for the market going forward.
Since CAPEX was not reduced during Q3 earnings announcements, it is crucial whether hyperscalers maintain their actual investment pace. However, rising funding costs due to high interest rates are clearly a burden for companies.
Economists and Bloomberg consensus anticipate a pause by the FOMC.
Thus, there is a discrepancy between market expectations for an interest rate hike and actual indicators and expert forecasts.
Recent key economic indicators such as employment, GDP, and PPI show strength, but inflation indicators are mixed, with CPI at 2.4%, its lowest since 2021.
Signs of economic slowdown, such as declining retail sales and record-low consumer sentiment, are also appearing simultaneously.
In this situation, arguments for an interest rate hike are emerging solely because core CPI exceeded expectations by 0.1 percentage point.
The administration's recent comments on interest rates have become more overt than before. This can be interpreted as an awareness of the possibility of a shrinking political standing depending on the midterm election results ahead of the presidential election.
Realistically, an interest rate hike is more likely to be implemented in December than in September.
Since taking office, he has barely mentioned interest rates. Recently, he's been doing so more overtly. It's like, 'Don't touch it. Don't do it until November 4th.' That's the nuance he's conveying.
In this scenario, market uncertainty can be resolved through a signal of the end of interest rate hikes.
A scenario where interest rates are frozen, but the possibility of future hikes is kept open, is also an option that could open up the market's upside.
Market shock has largely been priced in, so the future interest rate path presented through the dot plot, rather than the actual decision to hike, will play a crucial role. This path setting is important in dispelling market distrust.
After the FOMC meeting and Chuseok holidays, major economic indicators and corporate earnings announcements will immediately follow. Micron's earnings announcement and Samsung Electronics' guidance release are scheduled for early October.
Export data will be announced on October 1st, and attention is on whether these indicators will act as new momentum for a market rebound.
This reflects expectations that South Korea's economy will maintain robust growth despite recession concerns.
The rebound in the European economy and expectations for China's economic recovery next year are influencing these upward revisions.
This is a significant indicator given the KOSPI's reflection in the leading economic index.
This rise in the index is interpreted as a positive signal that partially alleviates concerns about worsening economic indicators due to the KOSPI's decline.
For macro environment improvement, a decline in the 10-year Treasury yield, currently in the 5% range, is necessary. If interest rates fall, hyperscalers' concerns will diminish, and cost and debt burdens will be alleviated.
Interest rate stabilization can lead to improved foreign investor sentiment, positively changing the overall market environment.
Major companies like NVIDIA and Oracle are demonstrating solid performance in the AI semiconductor sector. This reduction in uncertainty, based on strong performance, is creating a solid floor for current stock prices.
There is an expectation that if interest rate variables are controlled, market rebound momentum could increase sharply, like a coiled spring.
During a market rebound, the leadership of semiconductor and AI-related stocks will be reconfirmed. Furthermore, if interest rates stabilize, growth stocks, which suffered the most during the rate hike period, are expected to see significant rebound momentum.
In particular, heavily underperforming growth stocks in pharmaceuticals, biotech, and internet sectors could offer contrarian investment opportunities as interest rates stabilize.
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