Daily Market Report - February 05, 2026

February 5, 2026

📊 Executive Summary

Market Sentiment: Risk-Off
Korean and US markets experienced significant selloffs on February 5, 2026, with tech-heavy indices leading declines. Korean markets suffered the steepest losses with KOSPI down -3.86%, while US markets showed more modest declines. The sell-off was driven by concerns over elevated valuations in AI stocks, increased capital expenditure commitments from tech giants, and general profit-taking after recent rallies.

Key Highlights:

• KOSPI plunged -3.86% to 5,163.57, marking one of the worst single-day performances in 2026
• Korean tech stocks hammered: Samsung Electronics -5.80%, SK Hynix -6.44%
• US indices decline modestly: S&P 500 -0.71%, Dow -0.78%, Nasdaq -0.70%
• Tech sector under pressure: Alphabet -3.27%, Microsoft -2.05%, Amazon -3.81%
• VIX surges +11.13% to 20.71, reflecting heightened market anxiety
• USD/KRW stable at 1,463.40 won per dollar

🇰🇷 Korean Market Performance

KOSPI Index

5,163.57 | -3.86% (△ -207.05 points)

The KOSPI suffered its worst single-day decline in months, dragged down by heavy selling in semiconductor and automotive sectors. Foreign investors were net sellers, while institutional investors also reduced positions amid global tech sector weakness.

Top Korean Stocks Tracked

Analysis:

• Samsung Electronics extended losses on concerns over memory chip pricing and AI chip competition. The stock has now declined for three consecutive sessions.
• SK Hynix was the worst performer among tracked stocks, falling -6.44% on profit-taking after recent strong gains. High-bandwidth memory (HBM) demand remains strong, but valuation concerns persist.
• Hyundai Motor declined -3.08% amid broader market weakness and concerns over EV competition from Chinese manufacturers, particularly BYD’s global expansion.

Sector Performance:

• Technology: Heavy selling (Semiconductors led declines)
• Automotive: Weak (EV competition concerns)
• Financials: Moderate declines
• Consumer: Defensive positioning

🇺🇸 US Market Performance

Major Indices

The major US indices posted modest declines as tech stocks came under pressure following Alphabet’s announcement of a massive $180 billion AI spending plan and Microsoft’s analyst downgrade by Stifel. The VIX volatility index surged +11.13% to 20.71, signaling increased market uncertainty.

Magnificent 7 Performance

Performance Summary:

• Winners: NVDA (+0.30%), META (+1.14%) - AI infrastructure plays remain favored
• Losers: AMZN (-3.81%), GOOGL (-3.27%), MSFT (-2.05%) - Valuation concerns dominate

Key Developments:

1. Alphabet (GOOGL): Shares plunged -3.27% after announcing a record $180 billion capital expenditure plan for 2026, raising concerns about AI investment returns and near-term margin pressure.

2. Microsoft (MSFT): Stifel downgraded MSFT from Buy to Hold and slashed price target from $540 to $392, citing valuation concerns and intensifying AI competition. Stock fell -2.05%.

3. Nvidia (NVDA): Bucked the trend with a +0.30% gain. Analysts remain bullish on data center GPU demand despite OpenAI’s new Frontier platform announcement.

4. Meta (META): Rose +1.14% as investors applauded progress in AI monetization across its Family of Apps. Q4 earnings showed strong engagement and ad revenue growth.

5. Amazon (AMZN): Declined -3.81% ahead of Q4 earnings release (due today after market close). AWS growth expectations remain high but retail margins under scrutiny.

6. Tesla (TSLA): Fell -2.10% despite reporting 9% increase in China shipments for January. Ongoing speculation about potential SpaceX/xAI merger continues to create volatility.

7. Apple (AAPL): Held relatively steady with only -0.38% decline. 36% stock surge over past six months driven by successful AI product launches. Ex-dividend date Feb 9.

💱 Currency Markets

USD/KRW Exchange Rate

1 USD = 1,463.40 KRW
Change: Relatively stable (slight won weakness)

The Korean won remained relatively stable against the dollar despite domestic market turbulence. The Bank of Korea’s monetary policy stance and stable trade balance provided support. The won has been trading in a narrow range of 1,450-1,480 per dollar over the past week.

Implications:

• Exporters (Samsung, Hyundai): Neutral to slightly positive pricing competitiveness
• Importers: Stable input costs
• Foreign investors: Currency risk remains manageable

📈 Bond Markets & Interest Rates

US Treasury Yields

(Note: Exact current yields unavailable, using recent data trends)

Analysis:

• Treasury yields edged higher as risk-off sentiment favored quality bonds less than typical, possibly indicating inflation concerns outweighing growth fears
• Fed Chair nomination of Kevin Warsh by President Trump adds uncertainty to monetary policy outlook
• Next FOMC meeting: March 18, 2026 (only 16% odds of 25bp cut priced in)

Korean Government Bonds

• 3-Year KTB: Yield likely moved higher following KOSPI decline
• 10-Year KTB: Expected to track global bond market moves
• Bank of Korea maintaining cautious stance on policy rates

🎯 Sector Analysis

Technology Sector: Under Heavy Pressure

Key Theme: AI Investment Fatigue

The technology sector faced its worst day in weeks as investors questioned the massive capital expenditures being committed to AI infrastructure without clear near-term revenue visibility. Alphabet’s $180 billion spending announcement was the catalyst, but concerns extend across the industry.

Winners:

• Semiconductors (mixed): NVDA up, but memory chip makers down globally
• AI Infrastructure: Data center plays holding better than software

Losers:

• Cloud Services: MSFT, GOOGL, AMZN all under pressure
• Memory Chips: Samsung, SK Hynix suffered steep declines
• Software: Broad weakness on competitive AI concerns

Automotive Sector: EV Competition Intensifies

Tesla’s modest decline and Hyundai’s -3% drop reflect growing concerns about Chinese EV manufacturers, particularly BYD, expanding globally. Legacy automakers and EV pure-plays face margin pressure from intense competition.

Financial Sector: Defensive Positioning

Banks and financials showed relative resilience as investors positioned for potential Fed policy uncertainty with Kevin Warsh’s nomination as Fed Chair.

⚠️ Risk Factors & Concerns

1. Valuation Concerns in Tech

• Magnificent 7 P/E ratios remain elevated: NVDA at 43.25x, TSLA at 361.35x
• AI spending surge without proportional revenue growth raises sustainability questions
• Rotation risk: Money may flow from growth to value if sentiment shifts further

2. Fed Policy Uncertainty

• Kevin Warsh nomination as Fed Chair creates uncertainty about policy direction
• Warsh is known as a policy hawk, potentially signaling tighter monetary conditions
• Congressional hearings will be closely watched for policy hints
• Current Fed Chair Jerome Powell steps down in May 2026

3. Geopolitical Tensions

• US-China trade relations: Ongoing technology restrictions and tariff concerns
• Korea-China relations: Chinese EV competition threatens Korean automakers
• Middle East tensions: Oil price volatility potential

4. Earnings Season Pressure

• Mixed results from tech giants creating volatility
• Guidance matters more than beats: Amazon earnings today will be crucial test
• Margin compression concerns across multiple sectors

5. Technical Breakdown Risks

• VIX surge to 20.71 (+11.13%) signals rising fear
• KOSPI broke key support at 5,200; next support at 5,000
• S&P 500 near-term support at 6,800; break could accelerate selling

🔮 Market Outlook & Strategic Considerations

Near-Term (1-2 Weeks)

Bias: Cautious/Neutral

• Volatility expected to remain elevated as investors digest Alphabet’s spending plans and Microsoft’s downgrade
• Amazon earnings today (Feb 5) will be critical: AWS growth and retail margins in focus
• Key support levels must hold: KOSPI 5,000 / S&P 500 6,800
• Rotation potential: Watch for money flowing from Magnificent 7 to other sectors
• VIX above 20 suggests continued choppiness ahead

Medium-Term (1-3 Months)

Bias: Neutral to Cautiously Positive

• Fed clarity needed: Kevin Warsh’s Congressional hearings (timing TBA) will be market-moving events
• AI investment thesis resilient but timing of returns matters; near-term multiple compression possible
• Earnings visibility: Q1 2026 guidance will determine whether current weakness is buying opportunity
• Korean markets oversold: KOSPI’s -3.86% decline may present entry points if global sentiment stabilizes
• Sector rotation opportunity: Defensive sectors, small-caps, and international stocks may outperform

Long-Term (3-12 Months)

Bias: Constructive

• AI secular growth intact: Despite near-term volatility, multi-year AI infrastructure buildout continues
• Semiconductor demand robust: NVDA, Samsung, SK Hynix benefit from data center GPU and HBM demand
• Corporate profitability healthy: Earnings growth continues despite margin pressures
• Valuation reset healthy: Corrections create better entry points for quality names
• Korean stocks attractive: Trading at discounts to US peers; strong tech exposure

Investment Strategy Recommendations

For Conservative Investors:

1. Raise cash levels to 10-15% to take advantage of potential further weakness
2. Favor dividend aristocrats and defensive sectors (Consumer Staples, Healthcare, Utilities)
3. Bond allocation: Consider locking in 4%+ yields on high-quality bonds
4. Avoid leveraged positions until volatility subsides

For Growth Investors:

1. Don’t panic-sell quality names: AAPL, NVDA, META showing relative strength
2. Watch for capitulation signals: VIX spike above 25 could mark near-term bottom
3. Dollar-cost average into weakness rather than lump-sum deployment
4. Sector diversification: Don’t over-concentrate in Magnificent 7

For Korean Market Investors:

1. Samsung, SK Hynix oversold: -5.80% and -6.44% declines may be overdone given strong AI chip demand
2. Defensive rotation: Consider Korean financials and consumer staples
3. Currency hedge consideration: Won stability is positive but monitor BOK policy
4. Valuation opportunity: KOSPI P/E discount to S&P 500 widening

Key Stocks to Watch:

• Buy on weakness: NVDA, META, Samsung Electronics, SK Hynix
• Hold for now: AAPL, MSFT (wait for stabilization)
• Caution warranted: GOOGL (spending concerns), AMZN (await earnings), TSLA (valuation stretched)

📅 Key Events Ahead

This Week

• Feb 5 (Today): Amazon Q4 earnings after close
• Feb 6: Jobs report (January employment data)
• Feb 7: More tech earnings; economic data

Next 2 Weeks

• Feb 9: Apple ex-dividend date
• Feb 19: Microsoft ex-dividend date
• Feb 25: NVIDIA earnings (critical for market direction)

Upcoming Important Dates

• March 18, 2026: FOMC meeting (rate decision)
• April 2026: Major earnings season begins (AAPL, MSFT, GOOGL, META, AMZN)
• May 2026: Jerome Powell steps down as Fed Chair; Kevin Warsh assumes role (if confirmed)

🎓 Bottom Line

February 5, 2026 marked a significant risk-off session, particularly for Korean markets where the KOSPI plunged -3.86% amid heavy tech stock selling. US markets fared better but still declined as Alphabet’s massive AI spending commitment and Microsoft’s downgrade rattled investor confidence in technology valuations.

The key question: Is this a healthy correction or the start of something worse?

Our view: This appears to be a healthy correction within an ongoing bull market. The AI secular theme remains intact, corporate earnings are solid, and economic fundamentals are supportive. However, near-term volatility is warranted given stretched valuations and AI investment fatigue.

Action plan:

1. Use weakness selectively to add to quality positions
2. Maintain discipline on valuations and position sizing
3. Stay diversified across sectors and geographies
4. Keep cash reserves for better entry points if selling accelerates

Korean market-specific: The -3.86% KOSPI decline looks overdone given strong semiconductor fundamentals. Samsung and SK Hynix remain core AI infrastructure plays with attractive valuations post-selloff.

US market-specific: Magnificent 7 leadership is being questioned, but NVDA and META’s outperformance shows investor differentiation. The market is becoming more selective, which is a healthy sign of maturation.

📞 Disclaimer

This report is for informational purposes only and does not constitute investment advice. Market conditions can change rapidly. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. Past performance does not guarantee future results.

Report Generated: February 5, 2026, 12:00 PM EST
Data Sources: Yahoo Finance, Naver Finance, XE Currency, Market Analysis
Next Report: February 6, 2026

For questions or detailed analysis on specific stocks, please contact the research team.