Inflation Anxiety and Heightened Caution... KOSPI and KOSDAQ Struggling to Reverse Upward

[Image source=Yonhap News]

[Asia Economy Reporter Lee Seon-ae] The domestic stock market has continued its decline for two consecutive days. Investors remain cautious as concerns persist over whether the recent surge in inflation is a long-term trend.

As of 10:46 a.m. on the 12th, the KOSPI was down 0.77% at 3,184.46, and the KOSDAQ was down 0.40% at 974.72.

During the session, the market showed volatility, falling more than 1% at one point, but has been making efforts to narrow losses and reverse gains.

Following a decline in the New York stock market overnight, the market is in a cautious mood. On the 11th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed down 473.66 points (1.36%) at 34,269.16. The Standard & Poor’s (S&P) 500 index fell 36.33 points (0.87%) to 4,152.10, and the Nasdaq index closed down 12.43 points (0.09%) at 13,389.43.

Han Ji-young, a researcher at Kiwoom Securities, analyzed, "Market participants still have not alleviated their concerns about whether the surge in inflation is a long-term trend. However, the decline narrowed thanks to bottom-fishing buying supported by dovish remarks from U.S. Federal Reserve (Fed) officials."

Individual investors are solely defending the market decline by net buying. Individuals are net buying 974.2 billion KRW and 126.8 billion KRW in the KOSPI and KOSDAQ markets, respectively. In contrast, foreigners and institutions are net sellers in both markets. Foreigners have net sold 875.8 billion KRW and 77.6 billion KRW, while institutions have net sold 84.5 billion KRW and 45.2 billion KRW.

Among the top market capitalization stocks, only Samsung Biologics (3.92%) and Hyundai Motor (1.32%) are rising, while most others such as Samsung Electronics (-0.62%), SK Hynix (-1.22%), LG Chem (-2.52%), NAVER (-1.29%), Kakao (-0.44%), Samsung SDI (-0.94%), and Celltrion (-0.55%) are showing weakness.

Han said, "The Korean stock market is expected to attempt a rebound as oversold buying pressure flows into large-cap stocks including semiconductors. However, profit-taking desires remain at the current index level, and caution surrounding the U.S. April consumer price index results could be a burden. Nevertheless, the rebound in U.S. tech stocks and the Philadelphia Semiconductor Index in the previous trading session, along with the weakening dollar, are expected to have a positive impact on the domestic market. Additionally, since most Fed officials view the inflation surge as temporary, this is likely to contribute to improving market sentiment."