Korean Stock Market Declines Amid Powell’s Inflation Commentary and Mixed Global Trends

South Korea's stock market demonstrated early uncertainty on October 24, as investor sentiment wavered following remarks from U.S. Federal Reserve Chair Jerome Powell. His comments on inflation risks and employment challenges triggered a decline in U.S. equities, which in turn influenced trading activity in South Korea. Despite a positive opening, the KOSPI index quickly reversed directions due to persistent selling by retail investors.

At 9:32 a.m. KST, the KOSPI index fell 7.17 points (0.21%) to 3,479.02, compared to the previous session’s close of 3,486.19. The index opened 5.84 points (0.17%) higher at 3,492.03 but could not sustain the upward momentum. Retail investors unloaded KRW 115.6 billion worth of shares, overshadowing net purchases by foreign investors (KRW 64.7 billion) and institutions (KRW 59.4 billion), ultimately pressuring the index further.

Powell’s remarks at the Rhode Island Chamber of Commerce painted a cautious picture for monetary policy outlook. He stated, “Short-term inflation risks remain skewed to the upside, while employment risks lean to the downside,” hinting at an uncertain road ahead for significant rate cuts. These statements prompted a slump in U.S. markets overnight, portending similar impacts in South Korea’s trading environment.

Sector Trends and Performance of Major Stocks

Examining sectoral performance within the KOSPI index revealed a mixed landscape. Industries such as construction (up 0.11%), transportation and warehousing (up 0.04%), and telecommunications (up 0.39%) displayed resilience. However, retail (-0.55%), securities (-2.72%), and utilities (-0.40%) struggled to gain traction.

Among top market-cap stocks, there was an equally varied performance. Samsung Biologics climbed 0.68%, while Hanwha Aerospace experienced significant gains of 4.48%, signaling strong investor confidence. KB Financial edged up by 0.09%. On the downtrend, heavyweight stocks such as Samsung Electronics (-0.47%), SK Hynix (-0.83%), and Hyundai Motor (-0.68%) contributed to broader market weakness.

AI Industry Momentum and Implications for Semiconductors

Notable developments in the global tech sector continued to anchor discussions on the future impact of artificial intelligence (AI) and semiconductors. Kiwoom Securities researcher Han Ji-young highlighted Micron Technology’s positive earnings surprise and collaborative plans by OpenAI and Oracle to build five new AI data centers in the U.S. These advancements underline the sustained growth momentum across AI industries, with trickle-down effects for semiconductors, long considered foundational to AI infrastructure.

However, Han exercised caution in her assessment of the domestic stock market’s response. “Powell’s valuation concerns regarding equity markets, coupled with the U.S. market correction, will likely weigh on today's trading environment. Micron’s earnings optimism appears to be fading, fueling profit-taking activity,” she remarked.

KOSDAQ Mirrors KOSPI Downtrend Amid Varied Sector Dynamics

South Korea’s tech-heavy KOSDAQ index also faltered under similar pressures, retreating 4.32 points (0.50%) to 867.89 as of 9:32 a.m. KST. The index opened slightly lower at 870.54, down 1.67 points (0.19%) compared to the previous session’s close of 872.21.

Retail investors in the KOSDAQ market offered some support with net purchases worth KRW 44.7 billion, in contrast to foreign investors and institutions, who offloaded KRW 35.9 billion and KRW 2 billion, respectively. Despite this activity, the index struggled to break through negative sentiment.

Sector-wise, transportation equipment and components (up 0.83%), telecommunications (up 0.63%), and IT services (up 0.52%) posted modest gains. Meanwhile, setbacks were seen in entertainment and culture (-1.06%), machinery and equipment (-0.55%), and medical precision devices (-1.34%).

Individual stock performances also varied. Alteogen (up 0.10%), LegoChem Biosciences (up 1.00%), and HLB (up 0.13%) delivered minor upward movements. Conversely, EcoPro BM (-0.51%), Peptron (-4.22%), and EcoPro (-0.81%) declined, showing weakness in segments pivotal to KOSDAQ’s overall performance.

Currency Markets: Korean Won Dips Amid External Pressure

The Korean won weakened slightly in early trading on October 24, reflecting broader concerns tied to global equity market volatility. The KRW/USD exchange rate began the day at 1,393.0, up marginally by 0.4 won from the previous session’s close of 1,392.6. This minor depreciation aligns with cautious investor sentiment triggered by Powell’s remarks and broader challenges in international markets.

South Korea’s financial landscape reflects heightened sensitivity to external economic signals, particularly those emanating from the U.S. As remarks from Powell emphasize inflationary risks and employment uncertainties, the ripple effect continues to manifest in equity markets, sectoral performances, and currency flows. With both KOSPI and KOSDAQ indices under pressure, the cautious mood extends to currency markets, underscoring the interconnectedness of global financial trends.