[Good Morning Market] KOSPI Expected to Take a Breather... Earnings to Drive Stock-Specific Trading

Yonhap News Agency

On April 28, the KOSPI is expected to take a breather following its recent rally.

On the previous day, the Dow Jones Industrial Average in the New York stock market closed at 49,167.79, down 62.92 points (-0.13%) from the previous session. The S&P 500 index closed at 7,173.91, gaining 8.83 points (0.12%), while the tech-heavy Nasdaq Composite finished at 24,887.10, up 50.50 points (0.20%).

The New York stock market started the session on a weak note, pressured by concerns over the short-term rally, news of a delay in the second round of U.S.-Iran negotiations, and investor caution ahead of the Magnificent 7 (M7) earnings announcements. However, semiconductor stocks such as Nvidia (up 4.0%), Micron (up 5.6%), and Sandisk (up 8.1%) staged a strong rebound, recouping much of the earlier losses, and the markets ultimately finished mixed.

The second round of negotiations between the U.S. and Iran has not even been scheduled yet, and reports have emerged that Iran has opened an account to collect transit fees for the Strait of Hormuz, leading to a continued stalemate in the talks. Still, the market is not heavily pricing in war risks, as it largely expects the negotiations to eventually conclude. Nevertheless, given that both the Korean and New York stock markets have experienced sharp rallies recently, it is important to note that accumulated fatigue and caution could lead investors to take profits if these issues persist.

In a similar trend, signs of a short-term slowdown are also emerging in the semiconductor sector. Despite gains in Nvidia and Micron shares the previous day, the Philadelphia Semiconductor Index, which had surged more than 40% since the end of March, turned lower (-1.0%) after 19 consecutive trading sessions of gains.

The growth narrative for the industry, driven by expanded investment in artificial intelligence (AI), remains intact, but from a stock price perspective, the sector appears to have entered a consolidation period following a short-term overheating. As a result, until the M7 earnings announcements scheduled for later this week are completed, increased intraday volatility can be expected in AI and semiconductor-related stocks.

Despite uncertainties surrounding the U.S.-Iran negotiations, the Korean stock market continued its upward trend the previous day. This was supported by the Nasdaq's record highs, expectations for first-quarter results from major Korean sectors, and a shift to net buying by foreign investors, which pushed the KOSPI above the 6,600-point mark.

However, on this day, despite Nvidia and Micron hitting record highs, there is expected to be some profit-taking pressure due to the recent sharp gains. While the upside for the index may be limited, a market environment is likely where stocks such as Samsung SDI, Hyundai Engineering & Construction, and Doosan Robotics—related to energy storage systems (ESS), nuclear power, and robotics—move based on individual earnings events.

Han Ji-young, a researcher at Kiwoom Securities, analyzed, "Even within an upward trend, it is difficult to time trades of individual stocks in a period of high volatility like this. Especially this week, with a cluster of events including the April Federal Open Market Committee (FOMC) meeting, U.S. M7 earnings releases, and key domestic corporate earnings, there is a high possibility that market interpretations will diverge." She added, "Therefore, in the short term, trading strategies that leverage earnings events may be viable, but it is effective to maintain positions centered on existing leading sectors such as semiconductors, securities, and defense, where earnings visibility is high."

This content was produced with the assistance of AI translation services.