[R&E] U.S. Stock Market Hits Record High, SK hynix Earnings 'Surge' amid Rate Cut Expectations... Domestic Bank Delinquency Rates Remain a Cautionary Factor

[R&E: Research & Epoch] This is News Epoch's signature report that provides a perspective on the new investment era through an integrated analysis of global financial data and domestic research.

Global Market Brief

The U.S. stock market continued its record-high rally last weekend. The S&P 500 (NYSE: SPX) closed above the 7,100 mark for the first time in history, and the Nasdaq (NASDAQ: IXIC) set its longest consecutive winning streak since 1992. The Dow Jones Industrial Average (NYSE: DJI) surged 1.79% to 49,447.43, while the S&P 500 (NYSE: SPX) and Nasdaq (NASDAQ: IXIC) also rose by 1.20% and 1.52%, respectively.

The core driver of the market's strength is the decline in U.S. Treasury yields. The 10-year Treasury yield fell 6.3 bps from the previous day to 4.248%, and the 2-year yield dropped 6.5 bps to 3.7082%. The dollar index weakened, falling 0.12% to 98.098.

On the other hand, international oil prices are expected to see increased volatility. WTI (NYMEX: CL) recorded $83.85 last week, dropping 11.45%, but geopolitical risks in the Middle East re-emerged over the weekend. With growing uncertainty in crude oil supply due to Iran's declaration to re-block the Strait of Hormuz and the U.S. measures to block Iranian vessels, it is highly likely that upward pressure on oil prices will stimulate global inflation concerns.

Domestic Market Overview

On the previous trading day, the domestic stock market closed with mixed results. The KOSPI fell 0.3% to 6,207.6, while the KOSDAQ rose 0.2% to close at 1,164.9. Despite the solid trend in the U.S. stock market, internal instability factors such as rising bond yields and worsening loan delinquency rates acted as downward pressure on the domestic market.

The 10-year government bond yield rose 4.3 bps to 3.715%, and the 3-year yield increased 3.33 bps to 3.370%, contrasting with the downward trend in U.S. interest rates. In the foreign exchange market, the USD/KRW exchange rate fell 19.5 won to 1,460.3 won, but the 1-month Non-Deliverable Forward (NDF) was recorded at 1,465.91 won, indicating a slight stabilization.

Key Industry Issues and Insights

The transition to artificial intelligence (AI) and high value-added industries is reshaping the market landscape. This structural change is particularly evident in the semiconductor and shipbuilding industries.

The memory semiconductor industry is recording rapid growth, driven by AI demand. The operating profit for SK hynix (KOSPI: 000660) in the first quarter of 2026 is forecasted at 37.5 trillion won. In particular, surging demand for high value-added products like High Bandwidth Memory (HBM) has strengthened suppliers' pricing power. While NAND shipments in the first quarter increased by only 1%, selling prices surged by 71%, and DRAM selling prices also rose by 69%. Selling prices for DRAM and NAND are expected to rise by an additional 40% and 38%, respectively, in the second quarter. Accordingly, the fair stock price target has been upgraded to 1.7 million won. The trend of Nvidia (NASDAQ: NVDA) restructuring its business focus from the gaming market to AI chips is also creating a favorable environment for improving the earnings and strengthening the technological leadership of Korean memory companies.

The shipbuilding industry continues its order rally centered on high value-added vessels. With both newbuilding and secondhand ship price indices rising, STX Engine (KOSPI: 077970) recorded the daily upper limit of 29.99%, while Hanwha Engine (KOSPI: 082740) and HD Hyundai Marine Engine (KOSPI: 072870) also showed strength, rising 16.39% and 6.67%, respectively. Key drivers bolstering the earnings of the Korean shipbuilding industry include the rise in global maritime freight rates, demand for transition to eco-friendly ships, and strengthened momentum for LNG carrier orders due to rising LNG prices in Northeast Asia.

Conversely, the soundness indicators of the domestic banking sector are a potential factor of instability. The delinquency rate on won-denominated loans at domestic banks in February was 0.62%, up 6 bps from the previous month. In particular, the delinquency rate for small and medium-sized enterprises (SMEs) approached 1% at 0.92%, and the delinquency rate for corporate SMEs has already exceeded 1%. The fact that the volume of resolved delinquencies is less than half of the newly generated delinquent amount clearly demonstrates a decline in the repayment ability of vulnerable borrowers due to prolonged high interest rates. This poses a significant concern as it may lead to an increased burden of loan loss provisions and tighter loan screening in the future, triggering a credit crunch in the real economy.

Market Signals

• Decline in U.S. Treasury Yields: The 10-year yield fell to 4.248%, and expectations of the Federal Reserve's monetary policy easing provided a sense of relief to the market.

• Surge in International Oil Price Volatility: A surge in oil prices is highly likely as supply uncertainty deepens due to escalating geopolitical tensions in the Middle East.

• Strengthening of Pricing Power in Memory Semiconductors: The surge in selling prices by Korean semiconductor companies, led by SK hynix, proves the structural benefits of the AI era.

• Caution on Domestic Bank Delinquency Rates: As the SME delinquency rate approaches 1% and emerges as a ticking time bomb for the domestic economy, managing financial soundness is essential.

• Record-High Performance in the Indian Automotive Market: Q1 sales volumes in India for Hyundai Motor (KOSPI: 005380) and Kia (KOSPI: 000270) broke all-time records, proving their global growth momentum.

Epoch View: Investment Implications

The global market is staging a relief rally led by interest rate cut expectations and AI tech stocks. However, the domestic market is showing a differentiated pattern as internal risks such as rising bond yields and deteriorating financial soundness in the banking sector intersect.

As specific sectors like semiconductors and shipbuilding have entered a solid growth trajectory based on AI and high value-added demand, a strategy focusing on the fundamentals of individual industries rather than the overall direction of the market is effective. In an environment where macroeconomic uncertainties and positive factors in individual industries are mixed, investment polarization is expected to deepen further.

This content was generated using News Epoch's proprietary AI algorithm, which analyzes data from domestic major securities firms' research centers and global financial data in real-time. Please note that this is not an investment solicitation or recommendation for specific stocks.