[Good Morning Stock Market] US Stock Market Pauses... "KOSPI Expected to See Individual Stock Trends"

Nasdaq Pauses 'Record Rally' for Breather
EU Investigation, China Sanctions Weigh...Mixed Trends in Leading Stocks
KOSPI Likely to See Foreign Buying Slowdown...Individual Stocks Expected to Lead Market

On the 26th, the KOSPI is expected to show a stock-specific market trend.

On the 25th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 39,313.64, down 162.26 points (0.41%) from the previous session. The S&P 500 index fell 15.99 points (0.31%) to 5,218.19, and the Nasdaq index closed at 16,384.47, down 44.35 points (0.27%).

[Image source=Yonhap News]

The Nasdaq ended its four-day streak of record highs, while the Dow Jones and S&P 500 fell for the second consecutive trading day. Foreign media reported that "investors are cautious about excessive optimism regarding interest rate cuts ahead of the February Personal Consumption Expenditures (PCE) price index announcement scheduled for the 29th." The U.S. stock market appears to be taking a breather after hitting record highs last week due to the Federal Reserve's easing of tightening measures.

The "Magnificent 7" (Apple, Amazon, Alphabet, Microsoft, Meta, Nvidia, Tesla) showed mixed performance. Apple (-0.83%), Alphabet (-0.41%), and Meta (-1.29%) declined following news of the European Union (EU) launching an antitrust investigation. The EU has initiated an investigation into whether Alphabet, Apple, and Meta violated provisions of the Digital Markets Act (DMA), which was implemented to prevent "big tech bullying." Microsoft (-1.37%) also closed lower. In contrast, Nvidia (0.76%), Amazon (0.47%), and Tesla (1.05%) rose.

Semiconductor stocks, which have recently led the market, generally softened. The mood shifted somewhat after news that China plans to remove Intel and AMD chips from government servers and computers. Intel fell 1.74%, AMD dropped 0.57%, and Qualcomm (-1.52%) also closed lower. United Airlines, a representative stock in the aviation industry, plunged 3.40% following news that the Federal Aviation Administration will strengthen detailed investigations into safety incidents.

The Asset Management Strategy Department of Korea Investment & Securities Research Center stated, "The New York stock market, which had continued its record-high streak last week, closed slightly lower as profit-taking emerged and market interest rates, which had fallen last week ahead of this week's PCE inflation announcement, rebounded."

The previous day, the KOSPI closed at 2,737.57, down 10.99 points (0.40%) from the previous session. Large-cap stocks ended mixed, and profit-taking was seen mainly in semiconductor stocks and low price-to-book ratio (PBR) stocks. By sector, except for steel and metals (0.87%), pharmaceuticals (0.71%), and food and beverage (0.65%), most sectors declined.

Kiwoom Securities researchers Han Ji-young and Kim Ji-hyun said, "The mixed price movements among U.S. tech companies are expected to limit the upside of the domestic index overall, resulting in a stock-specific market trend. With short-term speed concerns building across the index, the ongoing net buying by foreigners may temporarily stagnate." They noted that the foreign ownership ratio of the KOSPI has reached 33.0%, close to the 10-year average of 33.4%. In a situation where institutional and individual trading is not active, the foreign investors' 'Buy Korea' momentum is likely to temporarily slow down.

The two researchers added, "Even if net selling by foreigners occurs during the remainder of this week, it should be interpreted as profit-taking rather than a shift to bearish bets on the Korean stock market. It is necessary to respond with a strategy to increase weights during corrections in the semiconductor, banking, automobile, and machinery sectors."