Kospi struggles despite Wall Street rally as Samsung Electronics, SK hynix slide more than 3%

The Kospi opened higher Tuesday, lifted by an overnight rally on Wall Street, but surrendered its gains as heavyweight semiconductor stocks weakened, leaving the index in mixed territory.

Foreign investors returned to net buying after a single session away, and easing geopolitical tensions surrounding Iran along with optimism over AI investment helped underpin sentiment. However, declines in SK hynix and Samsung Electronics capped the index's advance. The Kosdaq, meanwhile, extended its winning streak to a third consecutive session on bargain buying.

According to Korea Exchange, the Kospi opened up 93.93 points, or 1.50 percent, at 6,351.38 but then reversed into negative territory. As of 10 a.m., the index was trading down 1.74 percent at 6,148.83.

Buying and selling forces were evenly matched on the Kospi, with retail and foreign investors on the buy side and institutions selling. Retail investors net purchased 158.4 billion won ($111 million) and foreigners net purchased 268.4 billion won, while institutions were net sellers of 445.9 billion won. Foreigners had net sold approximately 2.8 trillion won on the Kospi on Monday before flipping back to buyers just one session later.

The overnight strength on Wall Street and improved investor sentiment appeared to influence foreign fund flows. All three major US indexes rose as technology stocks continued to advance. The Dow Jones Industrial Average gained 1.32 percent, while the S&P 500 and NASDAQ rose 1.48 percent and 2.13 percent, respectively.

The gains came as US President Donald Trump called off a planned strike on Iran, easing fears of armed conflict, while Wall Street offered an upbeat assessment of the profitability of AI investment, boosting sentiment toward technology stocks.

Nvidia rose 2.93 percent and Microsoft climbed 4.93 percent, helping push the Philadelphia Semiconductor Index up 1.06 percent. SK hynix's American depositary receipts fell 0.70 percent in regular trading but rebounded 2.93 percent in after-hours trade.

West Texas Intermediate crude futures settled at $80.34 per barrel, down 5.1 percent from the previous session, as easing geopolitical tensions weighed on oil prices.

With the Kospi having fallen sharply on Monday despite the easing of US-Iran tensions and Wall Street's advance, some bargain hunters moved in Tuesday.

However, weakness in the semiconductor heavyweights that drive the index limited the upside. SK hynix, which had plunged more than 8 percent on Monday, opened higher but reversed course and was trading down more than 3 percent. Samsung Electronics was also falling 3 to 4 percent, further capping the index.

The Kosdaq, by contrast, continued its upward momentum. The index opened up 10.84 points, or 1.47 percent, at 748.19 and extended its gains during the session, at one point surging as high as 774.93.

The Kosdaq had surged more than 11 percent on July 31 and added 2.4 percent on Monday, and was on track for a third consecutive session of gains Tuesday. Institutions were net buyers of 76.7 billion won, while retail investors and foreigners were net sellers of 14.6 billion won and 61.7 billion won, respectively.