[Good Morning Stock Market] M7 Stock Volatility vs US GDP Strength... "KOSPI Expected to Start Weak"

US Q2 GDP Records 2.8% Growth
Experts' Forecast 2.0% Greatly Exceeded
NVIDIA Plummets... Semiconductor Index Down 1.96%
KOSPI Semiconductor Rebound Seems Difficult

[Image source=Yonhap News]

On the 26th, the Korean stock market is expected to start weak. Despite positive factors such as the U.S. second-quarter real GDP growth rate exceeding market expectations and improved employment indicators, the U.S. stock market closed lower due to weakened investor sentiment.

On the previous day (local time) at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average closed at 39,935.07, up 81.2 points (0.2%) from the previous trading day. The large-cap-focused Standard & Poor's (S&P) 500 index fell 27.91 points (0.51%) to 5,399.22, and the tech-heavy Nasdaq index dropped 160.69 points (0.93%) to 17,181.72.

The U.S. second-quarter real GDP growth rate recorded 2.8%, surpassing market expectations thanks to increases in goods consumption, private investment, and government spending. This figure significantly exceeds the expert forecast of 2.0% and is higher than the first-quarter GDP growth of 1.4%. The second-quarter GDP deflator and core Personal Consumption Expenditures (PCE) price index fell by 80 basis points from the previous quarter to 2.3% and 2.9%, respectively.

Despite strong economic indicators, the stock prices of the 'Magnificent 7' tech giants, which had been driving the U.S. stock market, plunged simultaneously. This is interpreted as a result of shaken investor sentiment due to concerns over a bubble in artificial intelligence (AI) investments and poor earnings from big tech companies.

On the previous day (local time) in the New York market, the semiconductor index plummeted 1.96% from the previous trading day to 5,005.36 points. Nvidia fell 1.72% to $112.28. AMD also plunged 4.36%. Additionally, Intel dropped 1.89%, Micron 2.57%, and Broadcom 1.37%.

The Korean stock market is also expected to be affected by the weakness in U.S. semiconductors. Kim Seok-hwan, a researcher at Mirae Asset Securities, analyzed, "There will likely be attempts to reduce the decline through rebound buying following the previous day's drop, but a clear rebound is difficult to expect." He added, "In particular, due to the impact of macroeconomic uncertainties, the third-quarter or annual sales forecasts of global companies in sectors such as semiconductors and automobiles have been downgraded. This is expected to affect domestic companies within the same value chain as well."