SK Hynix plummeted nearly 10% early on Wednesday, dragging the chip-heavy KOSPI down as much as 12.6%. The index pared some of those losses to close down 6%, taking it to levels last seen in early April. Samsung is also set to report this week.
Despite a resilient bounce-back in U.S. stock indexes on Tuesday amid a heavy rotation of sectors that also saw Apple briefly top $5 trillion in market value for the first time, the tremors from South Korea now create a nervier environment for investors as they wait for Microsoft and Meta's results after the bell today.
Cash burn and leverage are likely to be watched closely, after Alphabet and Tesla set alarm bells ringing last week with their high and rising AI capex.
That said, the overall U.S. earnings picture is still ballooning and estimates for annual aggregate S&P 500 profit growth through the second quarter are now a whopping 39% - more than 10 points higher than estimates at the start of this month, according to LSEG data.
Before we get to the earnings announcements, though, there's the small matter of one of the most uncertain Fed decisions in years. With a one-in-three chance of an interest rate rise priced into futures - which Deutsche Bank claims is the most split the market has been ahead of a Fed meeting since 2018 - the stakes are high and multiple dissents are likely, even if rates are held.
And any Fed hopes of a clearer picture from energy markets amid this week's oil price retreat were muddied again overnight as the tense truce in the Iran conflict was broken. That saw global crude prices firm back up to more than $87 per barrel.
Washington said on Tuesday that it had conducted strikes with Saudi Arabia against Iran-aligned groups in Iraq, and that it had intercepted Iranian missiles launched towards U.S. bases in the Middle East.
With that, onto today's column.
