Nasdaq drops over 2%; Google joins Dow; Micron earnings tonight; Cerebras falls over 10%.

South Korean Stock Market Plummets Amid Tax Reform Discussions

Overview of the Market Decline

On June 23, the South Korean stock market experienced a sharp decline, with the KOSPI index triggering a trading halt. This drop was primarily attributed to discussions among lawmakers regarding the inclusion of unrealized gains from stocks and real estate in a comprehensive tax system.

Tax Reform Forum

A forum involving multiple political parties, including the Democratic Party and the Progressive Party, focused on transitioning to a "comprehensive income tax" model. This model proposes taxing the increase in net asset value, regardless of whether the assets are sold, which includes unrealized gains from investments.

Impact on Semiconductor Stocks

The decline in the stock market was exacerbated by reports from South Korean media regarding SK Hynix's decision to slow down the production expansion of its sixth-generation high-bandwidth memory chips (HBM4). This shift in focus towards general DRAM production raised concerns about the demand for high-end AI infrastructure.

U.S. Economic Indicators

PMI Data Surpasses Expectations

In the U.S., the preliminary June PMI data showed a rise to 52.2, indicating continued expansion in business activity. The manufacturing sector's PMI reached a 49-month high at 55.7, while the services sector saw a modest increase to 51.3.

Employment Concerns

Despite the positive PMI figures, employment indicators fell to a six-year low, raising concerns about the labor market's recovery amidst ongoing supply chain issues and cost pressures.

Global Oil Market Dynamics

Middle East Oil Supply Surge

Following the reopening of the Strait of Hormuz, there has been a significant influx of Middle Eastern oil into European markets, leading to a decline in key Brent crude benchmarks. Concerns over oversupply are mounting as various sources contribute to high inventory levels among European refiners.

Geopolitical Tensions

Iranian President Ebrahim Raisi clarified that the recent U.S.-Iran understanding does not address missile issues, emphasizing Iran's stance on its defense capabilities.

U.S. Congressional Actions

War Powers Resolution

The U.S. Senate passed a war powers resolution concerning Iran, marking a rare bipartisan rebuke of former President Trump's handling of U.S.-Iran relations. This resolution calls for the withdrawal of U.S. military forces from hostile actions against Iran unless Congress declares war.

Stock Market Performance

On June 23, U.S. markets closed with the Dow Jones down 0.09%, the S&P 500 down 1.44%, and the Nasdaq down 2.21%. Notable declines were seen in semiconductor stocks, with the Philadelphia Semiconductor Index dropping 7.87%.

Notable Index Changes

Google's parent company, Alphabet (GOOGL), will be added to the Dow Jones Industrial Average, while Honeywell Aerospace will replace Conagra Brands in the S&P 500.