Wall Street tumbled last night as artificial intelligence (AI) chip stocks plummeted and oil prices surged, creating a double whammy for investors. The ripple effect hit South Korea’s benchmark KOSPI index, which briefly dipped below the 7,400 mark in early trading on Monday.
As of 9:16 a.m. (Korean time), the KOSPI was trading at 7,537.00, down 119.31 points or 1.56% from the previous close.
The index opened sharply lower at 7,452.48, a 2.66% drop, and at one point plunged 3.96% to 7,352.89, its lowest level since May 20. However, net buying from institutional investors helped pare some of the losses.
Institutional investors were net buyers to the tune of 275.6 billion KRW (about 183.3 million USD), while individual and foreign investors were net sellers, offloading 117 billion KRW (about 77.8 million USD) and 155.5 billion KRW (about 103.4 million USD) worth of shares, respectively.
The ongoing slump in the KOSPI market reflects dampened investor sentiment, fueled by the overnight decline on Wall Street and escalating tensions in the Middle East.
Among the top 10 KOSPI-listed companies by market capitalization, SK Hynix managed to buck the trend, gaining 0.95%.
However, the rest of the blue-chip stocks took a beating. Samsung Life Insurance plummeted 6.53%, Samsung Electro-Mechanics shed 5.1%, Samsung C&T lost 4.83%, SK Square fell 3.83%, LG Energy Solution declined 3.31%, Samsung Biologics dropped 2.11%, Hyundai Motor slipped 1.77%, while Samsung Electronics’ preferred shares and common stock dipped 0.7% and 0.68%, respectively.
On Wall Street, all three major indices closed in the red on Tuesday, hit by a sharp sell-off in semiconductor stocks and surging oil prices. The Dow Jones Industrial Average fell 0.25%, the S&P 500 lost 0.45%, and the tech-heavy Nasdaq Composite slumped 1.16%.
The semiconductor rout that began with Asian chip stocks like Samsung Electronics spilled over to U.S. markets, with Micron Technology plunging 4.71% and Broadcom sliding 3.12%. The Philadelphia Semiconductor Index, a key barometer for the chip sector, nosedived 4.65%.
Adding to market jitters, oil prices spiked amid rising tensions in the Middle East. Reports of Iran attacking a Qatari liquefied natural gas (LNG) tanker near the Strait of Hormuz, coupled with the U.S. revoking a general license that had allowed Iranian oil sales, sent crude prices soaring.
Brent crude and West Texas Intermediate (WTI) futures jumped about 3% during regular trading hours and surged over 5% in after-hours trading.
The prospect of higher energy prices stoking inflation pressured U.S. Treasury bonds, with the yield on the benchmark 10-year note climbing 0.68% to 4.560%. Nasdaq futures edged down 0.05% in early trading.
Meanwhile, the tech-heavy KOSDAQ index also felt the heat, dropping 19.22 points or 2.31% to 812.01. Institutional investors were net buyers of 19.2 billion KRW (about 12.8 million USD) worth of shares, while individual and foreign investors offloaded 7.1 billion KRW (about 4.7 million USD) and 15.2 billion KRW (about 10.1 million USD), respectively.
The top 10 KOSDAQ-listed stocks by market cap all ended in negative territory. Rainbow Robotics tumbled 5.11%, ABL Bio fell 4.69%, EcoPro lost 3.79%, Alteogen declined 3.56%, JUSUNG Engineering dropped 3.47%, EcoPro BM shed 3.33%, Wonik IPS decreased 3.28%, HLB slipped 2.13%, LEENO Industrial dipped 1.67%, and Kolon TissueGene edged down 0.95%.