nginx is trying to serve my backend as a static site - nginx

Question

My frontend is a static site served at location /, while my backend is a REST API at location /core/. I've configured nginx.conf to reverse proxy the backend, but according to the logs, it's attempting to serve it as a static site.
2018/12/17 08:47:32 [error] 6#6: *12 open() "/usr/share/nginx/html/core/v1/api/user/login" failed (2: No such file or directory)
Here is my nginx.conf:
http {
log_format main '$remote_addr - $remote_user [$time_local] "$request" '
'$status $body_bytes_sent "$http_referer" '
'"$http_user_agent" "$http_x_forwarded_for"';
access_log /var/log/nginx/access.log main;
sendfile on;
tcp_nopush on;
tcp_nodelay on;
keepalive_timeout 65;
types_hash_max_size 2048;
include /etc/nginx/mime.types;
default_type application/octet-stream;
include /etc/nginx/conf.d/*.conf;
server {
listen 80;
server_name _;
# Load configuration files for the default server block.
include /etc/nginx/default.d/*.conf;
root /usr/share/nginx/html;
location ^~ /core/ {
proxy_pass http://my-named-backend:8080/;
proxy_http_version 1.1;
proxy_set_header Upgrade $http_upgrade;
proxy_set_header Connection "upgrade";
proxy_set_header Host $host;
proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
proxy_set_header X-Forwarded-Proto $scheme;
proxy_set_header X-Forwarded-Port $server_port;
proxy_set_header X-Real-IP $remote_addr;
}
location / {
# Nothing to put here since the dist/ files are
# /usr/share/nginx/html is automatically served.
}
error_page 404 /404.html;
location = /40x.html {
}
error_page 500 502 503 504 /50x.html;
location = /50x.html {
}
}
}
What's happening, and how can this be fixed?