The KOSPI fell sharply following Samsung Electronics' earnings announcement, while U.S. markets closed lower due to weakness in semiconductor stocks and a surge in international oil prices. However, analysts suggest that despite expected volatility in early trading, the recent drop has significantly reduced valuation pressures, potentially leading to a rebound as bargain hunters enter the market.
On July 7, the Dow Jones Industrial Average closed down 130.76 points (0.25%) at 52,925.15. The S&P 500 index fell 33.58 points (0.45%) to finish at 7,503.85, while the tech-heavy Nasdaq composite dropped 302.47 points (1.16%) to close at 25,818.69.
After a brief recovery, semiconductor stocks plummeted again. Micron Technology fell 4.71%, SanDisk dropped 7.22%, Marvell Technology declined 7.45%, and AMD decreased by 6.51%, dampening investor sentiment.
International oil prices also rose. Geopolitical tensions surrounding the Strait of Hormuz resurfaced, leading to an increase in West Texas Intermediate (WTI) crude oil for August delivery, which closed up 2.76% at $70.44 per barrel. Brent crude rose 3.01% to $74.16 per barrel.
The domestic market is expected to start weakly. As of 8:39 a.m., Samsung Electronics was down 3.39%, and SK Hynix fell 4.50% in pre-market trading. Other major stocks, including SK Square (-7.67%), Samsung Electro-Mechanics (-7.71%), Hyundai Motor (-4.07%), LG Energy Solution (-1.66%), Samsung Life Insurance (-4.27%), Samsung C&T (-4.24%), and Samsung Biologics (-1.05%), also showed declines.
Analysts anticipate increased volatility in early trading due to external factors such as the weak U.S. market, rising oil prices, and risks in the Middle East. However, they also believe that the recent sharp declines may highlight price advantages.
Han Ji-young, a researcher at Kiwoom Securities, stated, "While volatility may increase in early trading due to the weak U.S. market and uncertainties in the Strait of Hormuz, we expect bargain buying to emerge following the recent series of declines. Given that the KOSPI's valuation has dropped to levels comparable to the financial crisis, it is advisable to prioritize gradual buying rather than reducing stock exposure."
* This article has been translated by AI.
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