[Good Morning Stock Market] End of Seollal Holiday... Global Issues Expected to Directly and Indirectly Affect Korean Stock Market

The US New York stock market closed higher across the three major indices following earnings reports from key companies. The domestic stock market is expected to be directly and indirectly influenced by global issues that occurred during the Lunar New Year holiday period, such as the announcement of a cost-effective model by Chinese AI company DeepSeek.

On the 30th (local time), the Dow Jones Industrial Average (Dow) closed at 44,882.13, up 0.38% from the previous trading day. The S&P 500 index rose 0.53% to close at 6,071.17. The Nasdaq index ended trading up 0.23% at 19,678.05.

The New York stock market started higher, reflecting strong earnings from major tech companies. However, just before the close, US President Donald Trump announced the implementation of tariffs on Canada and Mexico, which caused the market to give back some of its gains by the end of the session.

The biggest issue shaking the New York market during the Lunar New Year holiday was DeepSeek’s release of the cost-effective AI model ‘R1’. The reason this model shocked the market was that its performance was comparable to OpenAI’s ‘GPT-4’, but it significantly reduced investment costs. The prospect that AI model training could be done with less use of high-performance chips like Nvidia GPUs caused Nvidia’s stock price to plunge by 17%.

Kim Dae-jun, a researcher at Korea Investment & Securities, said, “Although AI hardware stocks recovered some losses amid skepticism about the DeepSeek model, it is true that their upward momentum has weakened. However, as President Trump mentioned, the rapid advancement of Chinese companies in AI has served as a wake-up call for US companies, so large-scale investments may proceed more quickly, which should also be kept in mind.”

Since AI caused a significant shock to the market during the recent holiday, volatility in high-bandwidth memory (HBM) stocks related to AI hardware could greatly increase in the Korean stock market as well.

For example, SK Hynix is analyzed to potentially face deteriorating investor sentiment in the short term. One of SK Hynix’s main products, the 5th generation high-bandwidth memory (HBM3E), is a key component of high-performance chips like Nvidia’s H100. If market expectations spread that demand for high-performance semiconductor chips will decline, SK Hynix’s stock price could be partially impacted.

Meanwhile, the US Federal Reserve (Fed) held the benchmark interest rate steady at 4.25?4.5% on the 29th (local time) as expected by the market, so significant volatility in the domestic market is unlikely.

Researcher Kim said, “The Federal Open Market Committee (FOMC) results did not significantly raise market interest rates. The upward trends in sectors such as HBM, which has led the market, as well as bio, nuclear power, shipbuilding, and electricity, are not expected to be greatly disrupted. Against this backdrop, the KOSPI is also expected to gradually recover.”