Falling Treasury Yields and Oil Prices, Nvidia Rebound… What's the Strategy for Market Sector Rotation?

To effectively respond to current market volatility and generate stable returns, it is essential to closely monitor key indicators. The trend of U.S. 10-year Treasury yields and oil prices will play a crucial role in determining the overall market direction.

Seong Ha-jun, an expert, emphasized the importance of these two indicators, stating, "For the time being, if you want to make more stable profits when buying, selling, or responding to stocks in the market, I advised you to watch the 10-year yield and how the burden of oil prices is easing."

The U.S. 10-year Treasury bond yield has fallen to 4.62%, and West Texas Intermediate (WTI) crude oil prices have also plunged, attempting to enter the $70 range. This simultaneous sharp drop in oil prices and Treasury yields is expected to have a positive impact on the overall market.

The valuation of growth stocks is being highlighted again, particularly increasing the potential for a rebound in semiconductor-related stocks, which is expected to play a significant role in improving market sentiment.

The recent easing of market volatility is against the backdrop of news that discussions on an interim agreement between the U.S. and Iran are underway with mediation from major countries. Additionally, the release of the Personal Consumption Expenditures (PCE) price index is scheduled for this evening, drawing market attention.

Beyond this, major economic events such as Nvidia's earnings announcement, the Monetary Policy Committee (MPC) meeting, and the Jackson Hole symposium are lined up, so the possibility of increased market volatility cannot be ruled out.

The strong upward trend in long-term interest rates that recently shook the market has now reached a crucial turning point for a reversal. The key factor is the U.S. Treasury's decision to expand the scale of its long-term bond buybacks. With talks of potentially using additional funds from the Treasury General Account (TGA) balance, market concerns about previous additional bond issuances have largely eased.

This measure played a decisive role in curbing upward pressure on interest rates, acting as a positive signal not only for bond market stabilization but also for the overall financial market. Investors should pay attention to the Treasury's future bond management policies.

Concerns about an all-out war in the Middle East have decreased, alleviating anxieties about energy supply chains. This is a major factor in the decline of international oil prices, and with the reduced possibility of war escalation, the impact from damage to energy facilities is expected to be less severe than before.

Furthermore, news that Iran and Oman discussed the establishment of a temporary route in the Strait of Hormuz suggests a temporary reduction in the possibility of military expansion, leading to a visible decrease in risk premiums.

Seong Ha-jun, an expert, emphasized that two key indicators should be watched when determining current stock market positions. First is to confirm whether the U.S. 10-year Treasury yield continues to fall, and second is to closely monitor whether West Texas Intermediate (WTI) crude oil prices remain below $80.

The trends of these two indicators are expected to critically influence market stabilization and the recovery of investor sentiment, and investors should use these indicators to decide whether to enter the market or adjust their positions.

While news from Russia regarding a ceasefire agreement between the U.S. and Iran did cause some oil price decline, its overall impact on the market is expected to be limited. Seong Ha-jun, an expert, advised against paying too much attention to the article, emphasizing the need for a cautious market view, unswayed by unverified external news.

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Nvidia showed a rebound of over 2% after 8 trading days, improving investor sentiment. This led to a concurrent rise in major semiconductor companies such as SK Hynix, Micron, and AMD. The recent temporary correction in semiconductor stocks seems to have highlighted their valuation attractiveness, drawing in bargain-hunting.

While AI data center demand remains robust, the perception that the stock entered an undervalued zone during the correction was a key factor behind this rebound.

Despite Nvidia's recent rebound, with the earnings announcement approaching, it is still uncertain whether this upward trend will continue. Past experience often shows a pattern where stock prices fall further immediately after earnings releases, so Seong Ha-jun, an expert, advised a cautious approach rather than concluding that this rebound signifies the resolution of negative factors.

Investors would be wise to observe the stock price movement after the earnings announcement and prepare for a potential slowdown rather than expecting continued ascent.

The key point investors should focus on in Nvidia's earnings announcement is not simply the revenue figures but the guidance for the next quarter. Whether it meets market expectations will be a crucial factor determining future stock price movements.

Additionally, the mass production and shipping schedule for the next-generation GPU 'Rubin,' along with changes in gross profit margins due to rising memory and server costs, are indicators to be closely monitored.

The crucial factor determining Nvidia's stock price is not past performance but its future growth potential. In particular, the speed of next-generation GPU releases and how much future revenue guidance increases will be key points to confirm.

This positive trend for Nvidia is expected to directly impact domestic semiconductor beneficiaries such as Samsung Electronics and SK Hynix. Therefore, the content of Nvidia's earnings announcement should be used as a reference for establishing investment strategies for related domestic companies.

If Nvidia's strength continues, positive ripple effects are expected in the domestic semiconductor industry. Particularly, with the increasing demand for High Bandwidth Memory (HBM), the HBM-related substrate market is expected to grow concomitantly, which will in turn lead to the revitalization of the semiconductor inspection equipment market.

Seong Ha-jun, an expert, mentioned, "As HBM market demand for HBM increases, the substrate market will also improve, right? Then the inspection equipment market will also improve," suggesting the possibility of benefits across the entire HBM ecosystem.

Driven by the strength of the U.S. semiconductor sector, the domestic stock market is highly likely to open higher. The MSCI Korea Index reacted positively with a 3.75% gain, and the night futures market also closed up 1.2%, signaling optimism. The rising trend of Nvidia, Micron, AMD, and SK Hynix's American Depository Receipts (ADRs) supports a bullish start for the domestic market.

This trend will positively influence our market, making it highly probable for the domestic stock market to open with a gain today.

Even if the market shows an upward trend at the open today, absolutely no chasing buys. Seong Ha-jun, an expert, emphasized the need to closely observe if the upward momentum is maintained after the opening price forms, specifically between 10:00 AM and 10:30 AM. This is because such a fading pattern is common in periods of caution ahead of event announcements.

In particular, to determine whether the opening price gain is sustained, it is essential to confirm if foreign investors are actually buying spot assets.

Over the past five trading days, foreign investors' net selling has progressed quite rapidly, amounting to a staggering 9.9 trillion won in net selling over roughly one week from August 19 to the present. This large-scale selling pressure is making it difficult for the domestic stock market to sustain its upward momentum.

Therefore, for the market to show a meaningful rebound, foreign spot buying must flow into KOSPI large-cap stocks. Foreign supply and demand is currently one of the most important indicators for market judgment.

Caution is needed regarding the volatility of semiconductor large-cap stocks and materials/components (Soo-Boo-Jang) related stocks ahead of Nvidia's earnings announcement and the PC price index release. Growth stocks tend to be most sensitive to PC index fluctuations. Therefore, it is essential to confirm the influx of foreign spot buying.

Investors currently holding positions should consider a conservative strategy of adjusting their holdings and realizing profits during a rebound.

Currently, power equipment related companies show high attractiveness in the market. Particularly, stocks like LS Electric are securing record-breaking order backlogs in the U.S. market, maintaining stable growth. Seong Ha-jun, an expert, analyzed that such companies have an open upside in their stock prices, leading to expectations of a positive trend.

Other power equipment related companies such as Hyosung Heavy Industries and Taihan Electric Wire (HVDC) also possess high investment appeal based on their abundant order backlogs, warranting attention.

When selecting stocks in the current market, nuclear power and power equipment related stocks should be given the highest priority. Next, watch for the timing in the robotics market, and then focus on the biotechnology market. Seong Ha-jun, an expert, advised that it would not be too late to look at semiconductors after all these sectors.

Furthermore, it is important to avoid chasing buys at the market open and concentrate on buying at low points. Approaching the market from a conservative perspective, considering market volatility, will be a wise investment strategy.