[Good Morning Market] Profit-Taking vs. Bargain Hunting... KOSPI Expected to See Volatile Trading

On January 29, the KOSPI is expected to experience heightened volatility as a tug-of-war unfolds between profit-taking following recent gains and inflows of funds seeking bargain opportunities.

On the previous day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 49,015.60, up 12.19 points (0.02%) from the previous session. The S&P 500 Index ended at 6,978.03, down 0.57 points (0.01%), while the Nasdaq Composite finished at 23,857.45, up 40.35 points (0.17%).

The US Federal Reserve kept its benchmark interest rate unchanged at 3.50-3.75% per annum at the January Federal Open Market Committee (FOMC) meeting. This decision was in line with market expectations and had a limited direct impact on financial markets.

With the FOMC meeting concluding smoothly, stock price movements diverged after the market closed depending on the earnings reports of major US big tech companies. Microsoft reported quarterly revenue of $81.3 billion and earnings per share (EPS) of $5.16, surpassing market expectations. However, the growth rate of its core cloud computing service, Azure, slowed slightly to 39% year-on-year, compared to 40% in the previous quarter, leading to a decline of over 5% in after-hours trading.

In contrast, Meta announced strong results, with quarterly revenue of $59.8 billion and EPS of $8.88, exceeding consensus estimates (the average of analysts' forecasts). Meta set its 2026 fiscal year capital expenditure (Capex) guidance at $115 billion to $135 billion, above market expectations of around $110 billion. Despite increased investment in artificial intelligence (AI), Meta expressed confidence that profit growth would continue, sending its after-hours share price up over 9%. Tesla also rose more than 3% in after-hours trading as it signed a $2 billion investment agreement with AI startup xAI and emphasized that its autonomous driving business is proceeding on schedule.

On the previous day, the Korean stock market soared, driven by a sharp drop in the USD/KRW exchange rate due to a weaker dollar, expectations for earnings announcements from Samsung Electronics and SK hynix, and abundant market liquidity. The KOSPI rose by 1.69% and the KOSDAQ by 4.70%.

On this day, the Korean stock market is expected to see volatility as investors digest the detailed earnings announcements and conference calls from Samsung Electronics and SK hynix, with profit-taking and bargain buying forces clashing. As the share prices of Samsung Electronics and SK hynix have risen 6.8% and 14.3%, respectively, over the past two days, partially reflecting earnings expectations, there is a possibility of short-term 'sell-on-news' activity.

Lee Sunghoon, a researcher at Kiwoom Securities, commented, "However, with customer deposits surpassing 100 trillion won, market liquidity remains abundant, and buying sentiment toward leading large-cap semiconductor stocks driven by earnings momentum is still strong. In particular, after the market closed yesterday, SK hynix announced fourth-quarter operating profit of 19.1 trillion won, far exceeding consensus estimates, and revealed a plan to cancel treasury shares worth 12 trillion won, which further boosted investor sentiment."

He added, "Moreover, considering that Micron's share price surged more than 6% in the US market, the domestic semiconductor sector is also likely to maintain a solid trend today. Given the potential for further upward revisions in profit forecasts due to improved earnings, it remains valid to maintain a portfolio weighted toward leading semiconductor stocks."