KOSPI swings between heaven and hell…will it open higher on a Wall Street tailwind? [Market Preview]

A forecast is emerging that South Korean equities on the 9th will attempt a rebound on the back of a tailwind from Wall Street in New York.

In the previous session, the KOSPI closed at 5,089.14, down 74.43 points (1.44%) from the prior day. It plunged more than 5% intraday, slipping to the 4,800 level. As KOSPI 200 futures prices fell, program sell orders on the main board were halted for five minutes under a sidecar trigger. This marked the second sell-side sidecar activation this year. Foreign investors’ “sell Korea” pressure was intense. After dumping more than 5 trillion won worth of shares on the main board the day before, foreign investors posted a net sell of 3.322 trillion won again on the day.

The market’s roller-coaster swings last week began after reports that Wash, a former U.S. Federal Reserve (Fed) governor known for a hawkish tilt, had been selected as the next Fed chair. Expectations that the pace of U.S. rate cuts could slow rattled global equities, including in the U.S., while gold and silver prices also tumbled. Doubts over whether massive investment outlays by AI big tech will translate into profits also fueled selling.

However, on the 6th (local time), New York stocks—often seen as a bellwether for Korean markets—returned to strength. Tech shares again underpinned the broader market. The Dow Jones Industrial Average surged 1,206.95 points (2.47%) to close at 50,115.67, surpassing the 50,000 mark for the first time ever. The S&P 500 and the Nasdaq Composite also gained 1.97% and 2.18%, respectively. Nvidia shares jumped 7.87% after CEO Jensen Huang said, “AI demand remains incredibly strong,” easing market doubts.

Major names including AMD (+8.28%), Broadcom (+7.08%), Micron (+3.08%), Oracle (+4.65%), Palantir Technologies (+4.53%) and SanDisk (+3.77%) advanced in tandem. The Philadelphia Semiconductor Index also closed up 5.7%.

With U.S. stocks rebounding and bargain-hunting flows following the prior session’s rout, expectations are growing that the KOSPI will also open higher. Still, analysts say volatility could be amplified as U.S. employment data (11th) and the Consumer Price Index (CPI, 13th) are set to be released in unusually quick succession this week. Earnings releases from leading stocks such as Hanwha Aerospace, Doosan Enerbility and Mirae Asset Securities also warrant attention.

Han Ji-young, a researcher at Kiwoom Securities, said, “While we can look for a switch to net buying by foreigners and a rebound in the index, from midweek onward it is necessary to factor in not only caution ahead of the U.S. January jobs report and CPI, but also that a wait-and-see stance tied to Korea’s extended holiday could affect foreign flows,” adding, “Given that continuity in foreign trading and the direction of the domestic market are likely to emerge after next week’s holiday ends, it is appropriate to place directional bets on the index and leaders after the holiday.”

Reporter Maeng Jin-gyu maeng@hankyung.com