[Good Morning Market] New York Rises on Nvidia Optimism... KOSPI Expected to Open Higher

On August 29, the KOSPI is expected to open higher. This is attributed to the positive close in the New York stock market, where optimism about artificial intelligence (AI) continued despite disappointment over Nvidia's earnings.

Reuters Yonhap News

On August 28 (local time) in the New York stock market, the blue-chip Dow Jones Industrial Average closed at 45,636.9, up 71.67 points (0.16%) from the previous trading day. The large-cap S&P 500 Index rose by 20.46 points (0.32%) to finish at 6,501.86, marking a record high for the third consecutive session. The tech-heavy Nasdaq Index gained 115.019 points (0.53%) to close at 21,705.158.

Nvidia announced that its revenue for the second quarter of fiscal year 2026 (May to July of this year) increased by 56% year-on-year to $46.74 billion, with earnings per share (EPS) reaching $1.05. These figures slightly exceeded analysts' expectations. However, the company’s stock fell by 0.82% due to disappointment over weaker-than-expected data center performance and the relatively modest earnings surprise in overall revenue. Nevertheless, expectations for continued AI investment supported gains in other semiconductor stocks.

The U.S. preliminary gross domestic product (GDP) growth rate for the second quarter exceeded both forecasts and the advance estimate. The U.S. Department of Commerce announced that the seasonally adjusted preliminary GDP growth rate for the second quarter increased by an annualized 3.3% compared to the previous quarter. Market expectations were for a 3.1% increase, while last month's advance estimate was a 3.0% increase.

Lee Sunghoon, a researcher at Kiwoom Securities, explained, "The U.S. stock market saw a positive trend in AI-related stocks, including hyperscalers, following the upward revision of the preliminary second-quarter GDP, weekly new jobless claims coming in below market expectations, and Nvidia's solid earnings announcement. As a result, all three major indices closed higher."

Kim Jiwon, a researcher at KB Securities, said, "Following Nvidia’s earnings announcement, there was a mix of expectations and caution regarding the AI industry, but the strong second-quarter GDP growth supported gains. In Nvidia’s case, despite concerns about revenue concentration, expectations for this year’s revenue guidance-excluding China-grew, leading most investment institutions to raise their target prices."

The KOSPI is expected to start higher today, as U.S. technology stocks rose following Nvidia's earnings announcement. In addition, domestic policy is also expected to support the stock market. The Democratic Party of Korea has announced plans to pass the third amendment to the Commercial Act, which includes mandatory treasury stock cancellation, during the regular National Assembly session in September.

Researcher Lee Sunghoon predicted, "The domestic stock market will likely open higher, led by gains in AI-related stocks, reflecting the rebound in U.S. technology stocks after Nvidia's earnings announcement. In particular, the securities and holding company sectors, which have a high proportion of treasury shares, are expected to recover some of their recent declines in the short term."