KOSPI Slips Again Near 7,000, Ends at 6,954

South Korea's KOSPI reclaimed the 7,000 level intraday for the first time in 15 trading sessions and climbed as high as 7,100, but failed to hold the mark at the close. The index surrendered all of its early gains as rising oil prices, trade friction and caution over U.S. inflation and interest rates weighed on the market. Analysts say the KOSPI needs U.S. inflation and long-term yields to stabilize, along with firmer confidence in chip earnings, before it can break through what has become a wall at 7,000.

The KOSPI closed at 6,954.52 on the 8th, down 40.87 points, or 0.58%, from the previous session, according to the Korea Exchange. The index recovered the 7,000 level during the session for the first time since the 18th of last month, but slid quickly ahead of the close and ended lower. The last time the KOSPI finished above 7,000 was July 23 of this year, at 7,096.89.

The index has repeatedly stalled just below 7,000 in recent sessions. On the 18th of last month, it rose above 7,200 intraday before closing at 6,869, and on the previous day it jumped 4.61% only to finish at 6,995.39 — just 4.61 points shy of 7,000. On the 8th, oil prices rose as tensions between the United States and Iran persisted and reports emerged of an attack on Saudi Arabian oil facilities, while trade friction between the United States and Canada also pressured investor sentiment.

Market attention is focused in particular on U.S. inflation data due this week and the resulting moves in long-term yields. The U.S. producer price index for August is scheduled for release on the 10th, followed by the consumer price index on the 11th. Higher-than-expected inflation could push long-term yields up further, adding to valuation pressure on Korean equities. Investors also remain wary of the possibility of a rate increase at the Federal Open Market Committee meeting in September.

Lee Jin-woo, head of the research center at Meritz Securities, said that once rates pass a threshold they can affect liquidity, and that artificial intelligence investment is inevitably sensitive to rates given that Big Tech is funding its spending through debt. "What matters is how market rates respond after the CPI and the rate decision," he said.

Semiconductor stocks also need fresh momentum for the index to settle above 7,000. Samsung Electronics and SK hynix each surged as much as 2% and 4% intraday, lifting the index, before giving back their gains. Samsung Electronics closed 0.19% lower at 269,500 won, while SK hynix ended 0.56% higher at 1.793 million won. Expectations of expanded AI investment following OpenAI's unveiling of its new AI model, Astra, revived sentiment toward chip stocks, but the intraday rally did not hold through the close.

Chipmakers' surveys of next year's demand, conducted this month, are seen as a key variable in determining whether the index can climb further. If demand holds firm even after the sharp run-up in chip prices, earnings forecasts for next year and beyond could be revised higher.

A recovery in foreign buying is another factor. Foreign investors bought a net 3.7058 trillion won of KOSPI shares over the four trading sessions from the 3rd of this month through the 8th. Whether confidence in chip earnings holds and foreign buying continues is expected to determine the KOSPI's next attempt at 7,000. Retail investors' exit from the market is also a source of concern, with net selling of 14.5486 trillion won over the same four sessions.

Park Yeon-joo, head of the research center at Mirae Asset Securities, said whether the KOSPI settles above 7,000 will depend on the durability of AI investment and the earnings strength of major companies such as chipmakers. "Considering the earnings power of KOSPI companies, we still see current share prices as undervalued," she said.