Story
SK Hynix Shares Rebound Nearly 4% on Bargain Hunting After Rate Hike Selloff
Summary
Shares of the South Korean chipmaker recovered from a two-day rout triggered by a surprise interest rate hike, as the rebound was driven by investors buying the dip and technical factors related to options expiration.
Shares of SK Hynix Inc. rallied on Friday, gaining 3.9% to close at $158.29 as investors engaged in bargain hunting following a steep two-day decline. The rebound was supported by renewed analyst confidence and technical buying activity linked to options expirations, helping the stock recover from a 52-week low.
Rate Hike Triggered Sharp Decline
The chipmaker's stock had plunged more than 7% on Thursday as part of a broader market selloff. The rout was triggered by the Bank of Korea's unexpected decision to raise its benchmark interest rate by 25 basis points—its first such hike in approximately three and a half years, according to a report from Investing.com.
During the selloff, SK Hynix shares touched an intraday 52-week low of $145.57, falling below its initial public offering price of $149. Investor sentiment was also negatively impacted by a temporary suspension of approvals for new single-stock leveraged ETFs linked to the company by South Korean regulators.
Analyst Confidence and Technicals Fuel Recovery
AdFriday's recovery was driven by a combination of fundamental and technical factors. Analysts at HSBC reaffirmed SK Hynix as their top sector pick, arguing that market fears about the memory chip cycle nearing its peak are "overstated," as cited by the source report.
The rebound was also accelerated by dynamics in the options market. Key technical factors included:
- The expiration of the first monthly options contracts on SK Hynix's U.S.-listed shares.
- Traders pointed to short-covering and gamma-related buying as contributing to the stock's sharp move off its session lows.
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