[Good Morning Market] US Rebounds on Biotech Gains Despite Semiconductor Volatility... Korea Also Expected to Rise

U.S. Markets Close Higher: Biotech Leaders Moderna and Merck Surge

Korea Expected to Rebound on Bargain Hunting and Biotech Momentum

The U.S. stock market managed to rebound, buoyed by gains in biotech stocks that posted promising clinical results, even as volatility in semiconductor stocks heightened. The Korean stock market is also expected to rebound, driven by bargain hunting and improved investor sentiment centered around biotechs.

On the 18th, as the KOSPI index rose more than 3% in the early session, recovering the 7200 level, the current status of the domestic stock market was displayed throughout the dealing room at the Hana Bank headquarters in Jung-gu, Seoul. 2026.8.18 Photo by Jinhyung Kang

On the 19th (local time) at the New York Stock Exchange, the Dow Jones Industrial Average closed at 53,463.05, up 0.22% (119.65 points) from the previous trading day. The S&P 500 Index ended at 7,707.98, up 0.21% (16.22 points), while the Nasdaq Composite rose 0.16% (41.38 points) to close at 26,331.09.

During the July Federal Open Market Committee (FOMC) meeting, it was reported that several Federal Reserve officials expressed the view that further rate hikes would be necessary if inflation does not subside. Additionally, some analysts believe that the hawkish tone could strengthen further due to delays in the resumption of negotiations between the U.S. and Iran.

However, it is noteworthy that this meeting did not take into account the weaker-than-expected employment and inflation data published after this month. Furthermore, as the U.S. Treasury implemented emergency buybacks (purchasing 10 to 30-year mid- to long-term Treasury bonds), in an effort to address the surge in long-term U.S. bond yields—which had been a key driver of financial market turmoil—yields on the 10-year and 30-year bonds reversed course and began to decline. This has been seen as a factor contributing to market relief.

On that day, shares of semiconductor companies like Micron (-0.4%) and SanDisk (-3.5%) recorded sharp declines; however, biotech stocks such as Moderna (176.8%) and Merck (12.6%) posted significant gains and led the market. This surge was driven by positive results from the late-stage clinical trial of a personalized mRNA cancer vaccine co-developed by Moderna and Merck, which boosted investor sentiment.

Jiyoung Han, a researcher at Kiwoom Securities, commented, "Since the end of the Q2 earnings season, the market has been exposed to short-term pain and volatility as the focus shifts toward macroeconomics and regulations. However, considering that the Trump Administration has reiterated its commitment to curbing surging market interest rates, and the AI investment cycle has not ended, nor have the fundamentals of large tech companies been undermined, investors should continue to maintain at least a neutral weighting in equities."

The domestic market is likely to attempt a rebound on the 20th, boosted by bargain hunting after the previous day's sharp decline and by the strong performance of U.S. biotech stocks.

Despite the drop in U.S. semiconductor stocks, attention is focused on SK hynix, the leading local player, for announcing its shareholder return policy earlier than market expectations. After the market closed, SK hynix disclosed that it had decided to buy back and cancel shares worth 40 trillion won over the next three months—equivalent to about 3.3% of its total outstanding shares.

On this, a research analyst noted, "Previously, the company targeted shareholder returns within 50% of free cash flow (FCF) for the three years from 2025 to 2027. However, this latest disclosure signals an increase to above 50% of FCF, which is being interpreted as a surprise catalyst. The buyback and cancellation of treasury shares could improve earnings per share (EPS) and boost return on equity (ROE), increasing rigidity to the stock's downside."

There is also growing attention to signs that the concentration of funds in semiconductor stocks is easing. According to the global fund manager survey for August released by Bank of America (BofA), the most popular strategy was still semiconductors, but the response rate dropped significantly—from 82% last month to 53% this month.

The research analyst emphasized, "Given the combination of shareholder return momentum among leading stocks, the calming of surges in U.S. long-term yields, and the easing of global concentration in semiconductors, recovery resilience in both the KOSPI and KOSDAQ—both of which have suffered steep declines this week—should be factored into response strategies."

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