[Good Morning Stock Market] U.S. Closes Lower on Middle East Concerns... Korea Expected to Attempt Rebound

Positive Factors in Semiconductors and AI Offset by War Concerns in the U.S.

Korean Stocks Expected to Rebound Amid View That Recent Declines Are Excessive

While the U.S. stock market closed lower due to concerns over war in the Middle East, the Korean stock market is expected to rebound as some consider the declines in leading sectors to be excessive.

On the 20th, employees are monitoring the stock market and exchange rates in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. On that day, the KOSPI opened 2.60% lower at 6643.58 compared to the previous trading day, and the KOSDAQ opened 2.35% lower at 773.21, with losses gradually narrowing. July 20, 2026 Photo by Jo Yongjun

On July 20 (local time), at the New York Stock Exchange, the Dow Jones Industrial Average closed at 51,839.26, down 0.59% from the previous trading day. The S&P 500 fell 0.19% to 7,443.28, and the tech-heavy Nasdaq Composite closed at 25,508.07, down 0.05%.

On this day, the U.S. stock market saw bargain buying of semiconductor stocks such as Micron (up 1.9%) and SanDisk (up 2.7%), as well as positive news related to AI: Alphabet (up 1.5%) announced the development of a new AI chip, and Microsoft (up 2.2%) and AMD (up 1.6%) formed a partnership. The Philadelphia Semiconductor Index also rose 0.6%, closing at 11,743.85.

However, despite these positive factors, ongoing geopolitical tensions between the United States and Iran appear to have limited a stock market rebound. After Iran re-blockaded the Strait of Hormuz on July 11, the U.S. military has carried out retaliatory airstrikes for ten consecutive days. U.S. President Donald Trump made a strong statement on the social networking service Truth Social, saying, "Every time Iran kills a U.S. soldier, it will pay several times over."

In Yeouido’s financial sector, analysts assessed the risk of further escalation in the war as low. Han Jiyoung, a researcher at Kiwoom Securities, noted, "According to foreign media, both the United States and Iran have shown willingness to resume diplomatic negotiations, and it has been reported that neighboring mediator countries have also proposed a 10-day ceasefire, leaving room for the situation to be resolved." He added, "Furthermore, as earnings events for leading sectors like Alphabet and Intel are scheduled for the middle of the week, market sensitivity to U.S.-Iran tensions is likely to diminish over time."

The domestic stock market is expected to attempt a rebound today. This is due to a number of positive factors: a rebound in U.S. semiconductor stocks despite geopolitical uncertainty, improved conditions for foreign capital inflows driven by easing dollar-won exchange rate pressures, and buying interest from investors viewing the recent declines in leading sectors, including semiconductors, as excessive.

Nevertheless, increased volatility is likely to continue. In the 13 trading days so far this month, the KOSPI has triggered sidecar events on either the sell or buy side a total of nine times, while the KOSDAQ has triggered sidecar events seven times in the same period. Circuit breakers have also been triggered twice this month. One researcher commented, "The market remains highly concentrated, with Samsung Electronics and SK hynix accounting for more than 50% of the KOSPI’s total market capitalization. The fact that leveraged trading in single stocks accounts for 40% of total KOSPI trading volume is also a factor supporting continued volatility."

It is worth noting that in a volatile market, there is not only downside volatility but also upside volatility. The researcher explained, "The KOSPI's forward price-to-earnings ratio (PER) is still below 6 times—a historically undervalued range. The consensus for earnings is also on an upward trend, so from both a fundamentals and valuation perspective, factors for a rebound are accumulating."

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