An overnight rebound in US semiconductor stocks lifted Korean equities and crypto at the same time
The KOSPI, which plunged more than 4% yesterday, staged a sharp reversal today, fighting to reclaim the 6,600 level. Bitcoin moved in a similar rhythm, attempting to retake the $65,000 mark around the same time. The common thread: US semiconductor stocks rebounded overnight. The Philadelphia Semiconductor Index (SOX), which had entered a technical bear market last week, bounced back on bargain-hunting, and that tailwind appears to have spread simultaneously into both Korean equities and the crypto market. Today we take a closer look at what’s behind this joint rebound in risk assets.
KOSPI: From an Early Slide to 6,420 to a Sharp Rebound
The KOSPI opened up 0.58% at 6,553.88. But selling pressure hit almost immediately, dragging the index down to around 6,420 early in the session. That’s where the reversal began. By around 10:05 AM, the gain had widened to 1.66%, pushing the index to 6,624.74, and by 10:20 AM it had extended further to 2.22%, reaching 6,661. In a single day, the index recovered more than 3.7 percentage points off its intraday low.
Leading the charge, as usual, were the large-cap bellwethers. Samsung Electronics rose 3.69%, and its preferred shares jumped 4.37%. SK hynix also joined the rebound as bargain hunters stepped in. On the flow side, individual and foreign investors were net buyers of 206 billion won and 12.5 billion won respectively, while institutions were net sellers of 229.9 billion won, producing a somewhat mixed picture. The KOSDAQ, however, failed to follow suit — it fell 1.68% to 737.04, a lone weak spot in an otherwise green session.
What Lit the Fuse: US Chip Stocks, Led by Micron
The epicenter of last week’s global market turbulence was actually the US semiconductor sector. The Philadelphia Semiconductor Index (SOX) had fallen more than 20% from its late-June all-time high, officially entering a technical bear market, and the fallout dragged the S&P 500 down 1.6%, the Nasdaq down 2.9%, and the Dow down 0.9% over the week. The VanEck Semiconductor ETF (SMH) fell in three of the last four weeks, losing roughly 9% last week alone.
Then, overnight (US time, July 20), sentiment reversed sharply. Micron (MU) surged 4.52% to close at $991.64, driven by news that the company was expanding its previously announced US investment plan by $50 billion, bringing the total to $250 billion. The market read this as a strong statement of confidence in explosive memory chip demand tied to the AI infrastructure boom. Western Digital, Seagate, and SanDisk — all storage and memory-related names — rallied 3-4% in sympathy, while NXP Semiconductors, Teradyne, and AMD each gained more than 2%. Adding to the momentum, signs of a possible negotiated resolution to US-Iran tensions helped calm oil prices, further boosting risk appetite. By the close, the Nasdaq was up 1.30% at 26,206.89, the S&P 500 up 0.81% at 7,543.64, and the Dow up 0.27% at 52,487.41.
Adding to the mix this week, news emerged that SK hynix is reportedly pursuing what could be the largest-ever US IPO by a Korean chipmaker — reigniting investor interest in Korean semiconductor names as well.
Bitcoin Rallies Too — Outpacing Semiconductor Stocks This Month
What’s especially notable is Bitcoin’s trajectory. As we covered on the Swanpapa blog yesterday, Bitcoin recently slipped into bear market territory (a decline of more than 20% from its highs). Yet month-to-date, it’s actually up more than 11% — outperforming semiconductor stocks, which took a much harder hit over the same stretch. That divergence suggests risk-off sentiment tied to the chip sector correction may have peaked, with bargain-hunting capital flowing into both equities and crypto simultaneously. Indeed, at the same moment Korean equities were rebounding today, Bitcoin was also attempting to reclaim the $65,000 level — the two assets moving in a strikingly similar rhythm.
Risks That Haven’t Gone Away
Still, it’s too early to conclude that today’s bounce marks a full trend reversal across risk assets. A handful of variables remain very much in play.
- Big Tech earnings season kicks into high gear this week: Alphabet, Tesla, IBM, and Texas Instruments report on the 22nd, followed by Intel on the 23rd. Whether these results reaffirm confidence in AI infrastructure spending — or reignite fears about delayed monetization — will be the key swing factor for markets this week.
- US-Iran geopolitical risk is still unresolved: Signals of a possible negotiated deal from the Trump camp helped calm oil prices, but actual hostilities remain ongoing, meaning uncertainty could resurface at any time.
- A Fed official’s inflation warning: New York Fed President John Williams cautioned that if AI-driven demand entrenches inflation, further rate hikes could become unavoidable — a comment that could undercut the rate-cut expectations that have helped fuel the recent rebound.
- The risk of delayed AI monetization: An Apollo economist warned that if returns on AI investment continue to lag, tech-sector risk could eventually spill over into the broader real economy. How this week’s earnings address that concern will be worth watching closely.
Investor Takeaways and Expert Views
⚠️ Things Investors Should Watch
- Don’t mistake a single day’s bounce for a trend reversal: The KOSPI has swung wildly between sharp gains and losses since last week. Today’s rebound could well be a technical bounce driven by bargain-hunting; it’s safer to wait for this week’s earnings results before drawing conclusions.
- Watch the divergence between the KOSPI and KOSDAQ: While the KOSPI rebounded today, the KOSDAQ fell instead, highlighting a clear split between large-cap and small/mid-cap performance. Stock selection may need to account for this size-based divergence going forward.
- Recognize the strengthening correlation between stocks and crypto: Bitcoin has recently shown a tighter correlation with tech stocks. Investors holding both asset classes should be aware that the diversification benefit may be smaller than expected right now.
- Mark this week’s earnings calendar: Alphabet, Tesla, IBM, and Texas Instruments report on the 22nd, and Intel on the 23rd. These releases are likely to be the key turning point in determining whether this rebound has legs.
- Leveraged products still warrant caution: Until South Korea’s single-stock leveraged ETF regulations take effect on August 5, the kind of extreme volatility seen last week could resurface.
📌 What Experts Are Saying
- Han Ji-young, Kiwoom Securities analyst: Said Korean markets were likely to attempt a rebound today, supported by the overnight bounce in US semiconductor stocks, easing currency pressure, improving foreign investor flows, and a growing sense that the recent decline had been overdone — even with US-Iran geopolitical uncertainty still in the background.
- Adam Crisafulli, founder of Vital Knowledge: Assessed that the market views a major expansion of US military involvement as unlikely, and that a diplomatic resolution is ultimately seen as inevitable.
- Kathleen Brooks, research director at XTB: Noted that whether upcoming earnings show companies maintaining their commitment to AI infrastructure buildout will be the key factor determining whether the semiconductor rebound has staying power.
- John Williams, New York Fed President: Warned that if AI-driven demand entrenches inflation, rate hikes could become unavoidable — urging caution against excessive market optimism.
Taken together, today’s rebound looks like bargain-hunting sentiment — triggered by last week’s semiconductor sell-off — reflecting simultaneously in both the KOSPI and Bitcoin. But factoring in this week’s Big Tech earnings season, the still-unresolved US-Iran risk, and a Fed official’s inflation warning, it would be premature to feel fully reassured based on a single day’s bounce. The fact that the KOSPI and Bitcoin are moving in such a similar rhythm right now is itself a reminder of just how exposed both assets are to the same macro variables — which makes a cautious approach, watching both upcoming earnings and Fed messaging together, the prudent path forward.