The Return of U.S. Tech Stocks and a Check on Key Global Market Issues

The Return of U.S. Tech Stocks and a Check on Key Global Market Issues

Market overview: a tech-led rebound coexisting with risks

  • Global stock markets rallied strongly this week on the revival of U.S. tech stocks. 

    Bargain buying helped Microsoft regain a market capitalization of 3 trillion dollars, and the Dow hit an all-time high. 

    However, rising oil prices due to geopolitical tensions in the Middle East coexist with caution ahead of the U.S. consumer price index (CPI) release, so investors need to respond carefully.

 

 

In-depth sector analysis: a re-rating of AI and software

  • (1) Microsoft and Oracle confirm market leadership Microsoft, which had stalled briefly around its earnings release, surged more than 3% in a single day to reclaim the 3 trillion dollar market cap mark. 

    This became the decisive trigger that improved investor sentiment across tech stocks. In particular, Oracle's surge of around 9% sent a very important signal to the market. 

    Some in the market had been concerned about excessive AI infrastructure investment costs, but Oracle's rise proved that AI-related stocks are still market leaders.

 

  • (2) A relief rally in the software sector The fear that advances in AI technology would threaten the survival of existing software companies has eased. 

    Software stocks rebounded together by around 3%, as the market began to recognize AI not as a threat but as a new opportunity for growth.

 

 

Macro indicator analysis: a favorable financial environment and uneasy oil prices

  • (1) Stable interest rates and exchange rates Treasury yields, the biggest burden on the stock market, have stabilized at lower levels. 

    The U.S. 10-year Treasury yield fell to around 4.20%, as expectations of Fed rate cuts persist amid signs of a possible slowdown in the job market. The dollar index also fell to 96.87. 

    Yen strength following the Japanese election results drove the dollar weaker, and this weaker dollar and falling rates are providing a positive liquidity environment for the stock market.

 

  • (2) Geopolitical risks and rising oil prices Unlike the stabilizing financial environment, geopolitical risks are growing. 

    As tensions between the U.S. and Iran escalated, oil prices rose 1.27%. In particular, the U.S. government's advice to its ships to avoid passing through the Strait of Hormuz clearly shows the instability in the Middle East. 

    Rising oil prices are a variable that could push inflationary pressure up again, so continuous monitoring is needed.

 

 

Global stock market trends: rising together

(1) Chinese stocks: stimulus and holiday expectations Chinese stocks rebounded, led by tech, as the government's commitment to economic stimulus combined with expectations of higher consumption during the Spring Festival (Lunar New Year) holiday.

 

(2) European stocks: new highs Major European stock markets also hit new highs, showing that the current bull market is not limited to the U.S. but is a trend across global stock markets.

 

This week's key schedule and investment strategy

  • (1) Korean earnings calendar This week, earnings releases from major Korean companies are concentrated, so a stock-specific market is expected. 

    9th (Mon): Krafton, Hanwha Aerospace (watch the gaming and defense sectors) 10th (Tue): CJ CheilJedang, GS, KT (check the trend in domestic demand and telecom stocks) 11th (Wed): Doosan Enerbility, SM Entertainment, Kakao Games (beware of volatility in nuclear power and entertainment) 12th (Thu): Kakao (watch platform company earnings and future guidance)

 

 

  • (2) Key economic indicators and events 12th (Thu): Korea options expiration day Intraday volatility is likely to increase as foreign and institutional investors battle over supply and demand. 

    13th (Fri): U.S. January consumer price index (CPI) and Applied Materials earnings This is the most important event of the week. The CPI result will determine whether inflation is slowing, which will set the direction of the stock market next week. In addition, the earnings of Applied Materials, the leading semiconductor equipment stock, will affect investor sentiment across the semiconductor sector.

 

 

Conclusion: pursuing opportunities while managing risks

  • The rebound in tech stocks is welcome news, but geopolitical risks from the Middle East and U.S. inflation data are potential threats that could shake the market at any time. 

    Rather than chasing the rally, a selective approach focused on stocks with improving earnings is needed. 

    In particular, share price volatility can peak on earnings release days, so it is important to carefully check the earnings schedules of the stocks you hold and whether they meet market expectations (consensus).