Global profit-taking in stock markets

What happened: The South Korean stock market, measured by the KOSPI, has surged over 11.7% in four consecutive sessions, reaching above 5,870 points. This rally follows a seven-day streak where the index climbed 5.4%, closing at a record high above 3,310 points. Meanwhile, the U.S. market's CAPE ratio hit 39.2 in February, a level last seen before the dot-com crash, signaling potential overvaluation.

Market impact: The South Korean rally has been broad-based, benefiting sectors such as technology and financials. However, investors may now lock in gains, triggering profit-taking and potentially reversing the recent uptrend. Globally, the high CAPE ratio could imply lower future returns and increased risk of a market correction.

What to watch next: The KOSPI's performance on Thursday will indicate if the recent rally continues or if profit-taking sets in. Additionally, upcoming U.S. economic data, such as the CPI and retail sales reports, could provide insights into the sustainability of the current market valuation levels.