Why the "Record" Plunge? U.S. Interest Rates and Big Tech Earnings Are the Key Gauges

[Anchor]

SK Hynix is releasing its second-quarter earnings today. Tomorrow, the U.S. benchmark interest rate will be decided, and Samsung Electronics' earnings will also be announced. We will need to see how these factors impact the stock market.

Reporter Min Gyeongho has the details.

[Reporter]

The biggest shock to the stock market was the news that China has set out to develop DUV equipment.

It is a deep ultraviolet lithography system that etches circuits onto silicon wafers using light, serving as core equipment for semiconductor production.

The technology is virtually monopolized by ASML of the Netherlands, and exports to China have been banned since 2019.

This led to concerns that if China succeeds in mass-producing DUV and further emerges as a major supplier in the memory market, the profitability of Samsung Electronics and SK Hynix, which would be driven into competition, would decline.

With investment sentiment already vulnerable due to repeated sharp fluctuations driven by theories that semiconductors have peaked, news of the successful listing of Chinese DRAM firm Changxin Memory and its DUV development broke, and fear regarding Chinese semiconductors swept the market.

[Han Ji-young / Research Analyst, Kiwoom Securities: Given that psychological stamina has been almost entirely depleted, the mere news of development concerning Chinese DUV lithography equipment has caused a major slump in stock prices....]

Given that Changxin Memory also fell by nearly 4% yesterday, some opinions suggested that interest rates actually created the overall downward mood.

The argument is that doubts are spreading over whether U.S. big tech firms, which buy semiconductors on credit, can continue to spend money amid a phase of interest rate hikes.

[Lee Sang-heon / Senior Research Fellow, iM Securities Research Center: (To fund semiconductor-related investments,) they have no choice but to keep issuing bonds. What is heavily demanded of big tech companies that carry a lot of debt? Higher interest expenses, even more so. When Meta tried to issue bonds a few days ago, a 7% rate was demanded.]

While market concerns persist, the general consensus is that the drop is excessive, and the immediate focus should be on the U.S. benchmark interest rate to be decided early tomorrow morning.

Even if rates are frozen, it is crucial whether signals strongly hinting at the possibility of future hikes will emerge.

Additionally, experts note that in the earnings announcements from SK Hynix, Samsung Electronics, Microsoft, and Meta starting today, hints regarding future investments and demand will determine the market's direction rather than the quarterly results themselves.

(Photo courtesy of Yonhap News)
(Reported by Lee Byung-joo and Lee Moo-jin | Video by Park Ji-in)
※ Please note: This article was translated by AI and may contain errors.