[Good Morning Market] Sector Rotation Expected in Korean Stocks... Global Spotlight on Samsung's Earnings

Easing of U.S. Treasury Yield Surge, Rise of AI Infrastructure Stocks
KOSPI to See Sector Rotation as Investors Await Samsung Electronics' Earnings

There is an outlook that the domestic stock market will open higher, driven by the stabilization of the previously surging U.S. 10-year Treasury yield and the strength of U.S. artificial intelligence (AI) infrastructure stocks. Analysts also expect to see sector rotation trading, as investors await Samsung Electronics’ preliminary earnings announcement.

On the 6th (local time), U.S. stock markets closed higher, supported by the recovery of Middle Eastern oil exports, the stabilization of the upward trend in the U.S. 10-year Treasury yield, and strong earnings expectations stemming from Marvell Technology’s upward revision of its fiscal year 2028 revenue outlook (up 5.8%). The S&P 500 Index rose 44.98 points (0.58%) to finish at 7,818.93. The Nasdaq rose 122.48 points (0.45%) to close at 27,599.79, and the Dow Jones Industrial Average climbed 253.38 points (0.49%) to 51,521.28.

On the 29th, employees were 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 index opened at 6,844.41, down 45.33 points (0.66%) from the previous session, while the KOSDAQ started at 843.87, down 2.71 points (0.32%). September 29, 2026. Photo by Jo Yongjun

The profit momentum is expected to persist, particularly among AI and big tech (large information technology companies). Optimism continues as Marvell Technology raised its revenue outlook and AMD announced plans to expand supply. While shares of major AI companies such as Nvidia and AMD are in record high territory and could face profit-taking pressure, any pullback is expected to be more about taking profits rather than concerns about damage to fundamentals or earnings.

The domestic stock market is expected to start higher on October 7, 2026. This is attributed both to favorable external conditions, such as the U.S. 10-year Treasury yield falling below the 5.3% range, and to the strong performance of U.S. AI infrastructure stocks. However, during the session, the market’s upside is likely to be capped as investors await Samsung Electronics' preliminary earnings and exercise caution ahead of the market holiday later in the week, leading to a shift toward sector rotation trading.

KOSPI’s price recovery remains relatively weak. Currently, the KOSPI is still down by 24% from its peak, whereas overseas markets like the U.S. Nasdaq, Japan's Nikkei, and Germany's DAX have recovered to within less than a 5% drop from their peaks. This is interpreted as a result of supply-demand distortion caused by single-stock leveraged exchange-traded funds (ETFs) in July, as well as foreign investors taking profits after the KOSPI achieved the world's highest returns since the beginning of the year.

Volatility stemming from single-stock leveraged ETFs has subsided. As cumulative net selling by foreign investors has already exceeded KRW 180 trillion since the start of the year, the likelihood of further widespread profit-taking pressure is relatively small. In addition, large-cap stocks such as those in the semiconductor sector are providing downside support, which makes a rotation of funds into KOSDAQ or small- and mid-cap stocks possible.

Han Ji-Young, a researcher at Kiwoom Securities, said, "The burden of U.S. market interest rates and concerns over rising oil prices are both easing, so there is little likelihood that the KOSPI’s relative recovery will further weaken at this time." She added, "If, starting with the preliminary earnings of Samsung Electronics, we see evidence during the third quarter earnings season that major sectors are limiting earnings deterioration for the third quarter and their profit outlooks for next year are improving, it will be important to pave the way for an improvement in foreign inflows and a recovery in the domestic market’s returns."

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