Part 6 · Commodities and the global economy · Lesson 32
When the US sneezes, Korea catches a cold
A Korean investor's day starts with the US market overnight. Let's check with numbers how much, and when, Korea follows less.
QToday's question
If the US stock market falls 2% overnight, how much does the KOSPI follow down the next day?
On August 2, 2024, when the US jobs report came in much worse than expected, the S&P 500 fell 1.84%. On Monday after the weekend, the KOSPI fell 8.77%. It swung several times more than the US. Conversely, there are days when the US is quiet and only the KOSPI moves a lot. In this lesson we check with real numbers how much, why and when the US and Korean markets move together.
MAPLearning map for this lesson
We build it up in three steps. At the end of each step, a 'Quick check' lets you test your understanding before moving on.
In Lesson 20 you saw that the market reacts to the gap versus expectations, and in Lesson 21 the August 2024 jobs shock and the KOSPI's sharp drop the next day. In Lesson 24 you learned that the dollar strengthens when investors turn risk-off, and in Lesson 27 that foreign investors keep score in dollars. Along with the semiconductor cycle from Lesson 31 just before, this lesson shows these roads meeting at one point: 'the overnight US market'.
- STEP 1 · Basic conceptsWhy the US moves first
You will be able to explain that, because of the time difference, the US market opens and closes before Korea's, and the three paths through which US influence reaches Korea.
- STEP 2 · Understanding the principleHow closely does Korea follow?
You will be able to read how much the US market and the next day's KOSPI moved together using the and real data, and describe the tendency on days when the US market moved a lot.
- STEP 3 · Real-world applicationReading the US market in 5 minutes each morning
You will be able to look at the S&P 500, Nasdaq, semiconductor index, dollar and 10-year yield in order, guess which sectors will be affected today, and tell apart days when Korea-specific factors are large.
STEP 1Why the US moves first
While Korean investors sleep, the US market finishes its day of business. So when you open your eyes in the morning, an answer to 'how the world reacted yesterday' is already out.
Easy analogy · the older brother's report card
There are an older brother and a younger brother in one household. The older brother's report card always comes out a day before the younger one's. If his grades drop sharply, the mood at home turns heavy, and the younger brother gets tense the next day. But the younger brother's grades ultimately depend on how much he studied. The US market is the older brother and the KOSPI is the younger brother. The mood follows, but the result depends on the strength and circumstances of Korean companies.
The order created by the time difference
US regular session (New York)
10:30 pm to 5 am the next day Korea time (during US daylight saving time). Outside daylight saving time, it is 11:30 pm to 6 am.Korean regular session (Seoul)
9 am to 3:30 pm. Because it opens a few hours after the US market closes, it starts out reflecting the result of the .Most major US economic indicators are also released at 9:30 pm Korea time (during daylight saving time). The jobs report in Lesson 19 and the CPI in Lesson 8 are examples. So a US indicator surprise (Lesson 20) is reflected first in the US market, and the result carries over to the KOSPI the next morning.
Three paths of US influence
1. The earnings path
The US is the world's biggest consumer market. When US consumption and corporate investment grow, Korea's semiconductor, auto and machinery exports grow and the earnings knob rises (Lessons 1 and 22).2. The interest rate path
The Fed's decisions and the US 10-year yield are the price of the world's money. When US rates jump, Korean market rates tend to follow upward, which weighs on the multiple knob (Lessons 14 and 17).3. The dollar and capital flow path
When the US market is uneasy, the dollar strengthens and money tends to leave emerging markets. Foreign investors keep score in dollars, so a weak won can also prompt selling (Lessons 24 and 27).When a shock that arises in the US spreads to other countries' markets through several paths like this, it is called a . On days when all three paths move in the same direction at once, the KOSPI can even swing more than the US.
Quick checkOn Thursday at 9:30 pm, US CPI came in higher than expected. Which market reflects this news first, and when does it reach the KOSPI?
STEP 2How closely does Korea follow?
Let's check with ten years of daily numbers how true the saying "when the US coughs, Korea catches a cold" really is.
S&P 500 change (horizontal) vs. next-day KOSPI change (vertical), 2021.10 ~ 2026.9
Each dot is one day. The more dots in the upper right and lower left, the more the two moved in the same direction.
Sources: FRED SP500 (S&P 500 close), Naver Finance KOSPI daily close. Each KOSPI trading day was paired with the change on the preceding US trading day (cases more than 4 days apart, due to US market holidays and so on, were excluded), and the correlations and averages were calculated by Robin Invest. In the dot chart, points beyond ±6% and ±10% are pinned to the border. Checked 2026-10-05.
The dots form a cloud tilted toward the upper right. This means that the KOSPI often rose the day after the US rose, but the cloud is spread quite wide. The calculated from about 2,450 days from October 2016 to September 2026 is 0.30. Pairing the US and Korea on the same calendar date gives only 0.10. Because of the time difference, the link only shows up when you pair 'US today → Korea tomorrow'.
A 0.30 means that on many days the two move separately, but if you collect only the big days, the story changes. Since October 2021, on 270 of the 335 days (81%) when the S&P 500 moved more than 1%, the KOSPI moved in the same direction the next day. After the 37 days when the S&P 500 fell 2% or more, the KOSPI fell 1.12% on average, and 84% of them were declines. After the 35 days when it rose 2% or more, the KOSPI rose 1.32% on average. In other words, the harder the older brother coughs, the more likely the younger brother is to cough too.
By year, the strength of the link also varies. It was strong in 2022 (0.50), when interest rates shook the whole market, and in 2025 (0.49), when there was a tariff shock, and weak in 2017 and 2021 at 0.26–0.27. In 2026, the KOSPI's daily swing (standard deviation 3.82%) was more than four times that of the S&P 500 (0.83%), so Korea-specific moves were large.
Common misconceptions
- "If the US market rises, the KOSPI must rise too?"
- A correlation of 0.30 means 'generally the same direction', not 'always'. Even on days when the US moved more than 1%, the KOSPI went the opposite way about one time in five. On many days, Korean factors such as semiconductor prices, foreign investor flows, the exchange rate and domestic policy are bigger.
- "The KOSPI always moves less than the US?"
- On average, the KOSPI followed only a bit more than half of the S&P 500's moves (a slope of about 0.58 since October 2021). But when several paths move in the same direction at once, as on August 5, 2024, it can swing several times more than the US.
- "Just watching the Dow is enough?"
- What matters to the Korean market is the sector makeup. For the KOSPI, with its large semiconductor weight, the tech-heavy Nasdaq and the are the more important signals on many days.
Quick checkLast night the S&P 500 rose 0.2%, but today the KOSPI fell 3%. What should you look for first?
STEP 3Reading the US market in 5 minutes each morning
Now let's build an order you can use every morning. With five numbers, you can guess which sectors will catch the wind today.
Overnight US market → today's KOSPI (simplified for education)
The 'KOSPI opening direction' is an educational simplification that multiplies the S&P 500 by the average slope for October 2021–September 2026 (about 0.58). The actual KOSPI can differ greatly depending on Korean factors. The S&P 500 and 10-year yield values in the 2024.8.2 preset are real values based on FRED, while the semiconductor index and USD/KRW values are examples for illustration.
Days it really spread widely, and days it did not
| US trading day | S&P 500 | Next KOSPI trading day | KOSPI | What happened |
|---|---|---|---|---|
| 2022.11.10 | +5.54% | 11.11 | +3.37% | US CPI came in lower than expected and rates fell (Lesson 20) |
| 2024.8.2 | −1.84% | 8.5 | −8.77% | A jobs shock triggered recession fears, combined with a stronger yen and risk-off (Lesson 21) |
| 2025.4.4 | −5.97% | 4.7 | −5.57% | The US tariff shock continued for a second day |
| 2025.4.9 | +9.52% | 4.10 | +6.60% | A sharp rebound after the announcement of a partial tariff delay |
| 2026.3.3 | −0.94% | 3.4 | −12.06% | The US fell less than 1%, but only the KOSPI plunged. A day when Korean factors were large |
The first four days are days when the three paths moved in one direction. On August 5, 2024, the US jobs shock (worry about the earnings path) was combined with risk-off and foreign selling (the dollar and capital flow path), and the KOSPI fell more than four times as much as the US. By contrast, on March 4, 2026, the KOSPI fell more than 12% even though the US market moved less than 1%. On days like this, no amount of staring at the US market will reveal the reason. That year, Korea-specific factors shook the KOSPI heavily, such as the semiconductor cycle and large foreign investor trading (Lesson 27).
In practice: the morning order
| Order | Number to look at | Who is likely to be affected today |
|---|---|---|
| 1 | S&P 500 · Nasdaq | The mood of the whole market. If it moved more than 1%, the KOSPI is likely to open in the same direction. |
| 2 | PHLX Semiconductor Index (SOX) | Semiconductors, equipment and materials. The sector with the largest weight in the KOSPI (Lessons 26 and 31). |
| 3 | US 10-year yield | If it surged, growth stocks, internet and biotech come under pressure, while banks and insurers are relatively less hurt (Lessons 17 and 18). |
| 4 | Dollar and USD/KRW overnight quote | A weak won favors exporters but raises concern about foreign selling (Lessons 25 and 27). |
| 5 | Indicators released overnight | Check whether any indicator had a big gap versus expectations (Lesson 20). |
Each morning you can check US indexes, interest rates and exchange rates in Today's market, and foreign investor flows in Flows in Market Data. The paths by which US indicators spread to sectors are laid out in the causal chain on the Macro Map.
It is not always so. The link between the US market and the KOSPI differed in strength from year to year, and was stronger on bigger days. The US market is only the starting point of the day; the KOSPI's close is decided by Korean companies' earnings and flows.
Quick checkLast night the S&P 500 was flat, but the Philadelphia Semiconductor Index (SOX) rose 4%. Which part of the KOSPI will feel the wind first today?
✓What we learned today
- The US session ends before Korea's regular session opens, so the overnight result in the US market becomes the starting point for the KOSPI the next morning.
- US influence reaches Korea along three paths: corporate earnings through US demand, the multiple through the Fed and US interest rates, and the dollar and foreign capital.
- From October 2016 to September 2026, the correlation between the S&P 500's daily change and the KOSPI's change the next day was 0.30. On many days the two move separately, but on days when the US moved more than 1% since October 2021, 81% went the same direction.
- On the day after the S&P 500 fell 2% or more, the KOSPI fell 1.12% on average, and it declined 84% of the time. The more violently the US market swings, the stronger the link becomes.
- On days when the US is quiet but only the KOSPI moves sharply, look first for Korea-specific factors (the semiconductor cycle, foreign investor flows, the exchange rate, domestic policy).
After the US, the country with the biggest influence on Korea's economy is China. In the next lesson, we look at how China's consumption, property market and stimulus policies spread to Korean sectors such as cosmetics, steel and chemicals.
Quiz5-question quiz
Pick an answer and it's graded right away with an explanation.
Q1. A US indicator was released at 9:30 pm Korea time. When is it usually reflected in the KOSPI?
Korea's regular session ended at 3:30 pm, so the US market reacts first overnight, and the KOSPI opens at 9 am the next day based on that result.
Q2. From 2016 to 2026, the correlation between the S&P 500 and the KOSPI on the 'next day' was 0.30, versus 0.10 for the same calendar date. What can we learn from this?
The US market opens after the Korean market closes. So the relationship is weak for the same calendar date, and the link only shows up when you pair a US day with the next Korean day.
Q3. Since October 2021, how did the KOSPI do on the day after the S&P 500 fell 2% or more?
The link gets stronger on days when the US swings hard. The KOSPI fell 1.12% on average and declined more than eight times out of ten. The size of the move, however, was often smaller than in the US.
Q4. The US 10-year yield jumped overnight. Which sector on the KOSPI faces relatively more pressure today?
When interest rates rise, the present value of distant future earnings shrinks sharply, which pushes down growth-stock multiples (Lesson 17). Banks and insurers may be hurt less, or even benefit (Lesson 18).
Q5. The US market was quiet last night, but the KOSPI fell more than 10% today. What is the most appropriate attitude?
If the US market was quiet, the cause is more likely on the Korean side. There are days, like March 4, 2026, when Korea-specific factors shake the market hard.
NextTerms · Next lesson · Related tools
This refers to the US regular session, which runs from night into early morning Korea time. Because it ends before the Korean market opens, its result becomes the starting point for the KOSPI the next day.
Philadelphia Semiconductor IndexPHLX Semiconductor Index (SOX)An index built from the share prices of major US-listed semiconductor companies. It is often used to gauge the morning mood of semiconductor, equipment and materials sectors on the KOSPI, where chips carry a large weight.
Correlation coefficientCorrelation coefficientA value between −1 and +1 showing how much two numbers moved together. Close to +1 means the same direction, 0 means almost no relationship, and close to −1 means they moved in opposite directions. It reflects only a past relationship and does not imply cause and effect.
SpilloverSpilloverThe phenomenon in which a shock in one country or market spreads to other countries' markets through channels such as trade, interest rates, exchange rates and investment flows.
Risk aversion (safe-haven preference)Risk-offA phenomenon in which, when anxiety grows from events like war, financial crises, or sharp stock market drops, investors sell stocks and emerging-market currencies and flock to safe-haven assets such as the dollar, government bonds, and gold. The won generally weakens at such times.
Dollar indexDollar indexThe average value of the dollar against several currencies such as the euro and yen. There is the DXY, based on six major currencies, and the Fed's broad dollar index, which covers a wider group of trading-partner currencies.
Foreign investorForeign investorA collective term for overseas pension funds, asset managers, sovereign wealth funds, hedge funds, and others that register with the Financial Supervisory Service as foreign investors and trade Korean stocks. They calculate returns in their own currency, such as dollars, so they are sensitive to the exchange rate.
FedFed, US Federal Reserve SystemThe central bank of the United States. It sets the policy rate with the goals of price stability and maximum employment.
10-year Treasury yield10-year Treasury yieldThe interest rate when a government borrows for a 10-year term. The US 10-year yield is used as a benchmark rate for asset prices worldwide.
SurpriseSurpriseThe difference between the actual announced figure and the market's expectation (the consensus). The market reacts to the direction and size of this gap rather than to the number itself.
Nonfarm payrollsNonfarm payrollsThe number of paid jobs excluding agriculture, counted in the establishment survey of the US jobs report. A news line such as 'jobs rose by X thousand' is the month-over-month change in this number.
Priced inPriced inA state in which something expected to happen is already reflected in prices such as stock prices or interest rates. If things happen as expected, prices do not move much.
This is educational material and not investment solicitation. There is no guarantee that past relationships will repeat in the future.