The KOSPI tumbled more than 3% in early trading on the 14th, sliding below the 6,700 level. Unresolved geopolitical tensions in the Middle East, combined with a hotter-than-expected U.S. core consumer price index that raised the odds of a Federal Reserve rate increase, spread risk-off sentiment across the market.
The KOSPI opened at 6,692.61, down 217.30 points, or 3.14%, from the previous session, according to the Korea Exchange. The KOSDAQ opened at 806.27, down 14.37 points, or 1.75%.
Large-cap stocks fell across the board. As of 9:03 a.m., Samsung Electronics (005930.KS) traded at 250,000 won, down 9,500 won, or 3.66%. SK hynix (000660.KS) plunged 95,000 won, or 5.24%, to 1.717 million won.
Samsung Electronics preferred shares fell 3.88%, Samsung Electro-Mechanics 5.21%, Hyundai Motor (005380.KS) 4.31%, Samsung Life Insurance (032830.KS) 3.41%, Samsung Biologics (207940.KS) 2.12% and LG Energy Solution (373220.KS) 1.39%.
On the KOSDAQ, major growth stocks including robotics names declined together. Rainbow Robotics dropped 3.90% and Robotis 3.71%. EO Technics fell 4.15%, EcoPro BM 3.45%, Alteogen 3.36% and EcoPro 3.32%.
U.S. stocks rebounded over the weekend on lower oil prices, but the gains failed to calm Korean markets. On the 11th, the Dow Jones Industrial Average rose 0.98% and the Standard & Poor's 500 index gained 0.86%. The Nasdaq Composite and the Philadelphia Semiconductor Index climbed 0.96% and 1.81%, respectively. West Texas Intermediate crude snapped an eight-session winning streak, easing concerns about high energy prices.
Hopes for a reopening of the Strait of Hormuz, which had driven oil prices lower, weakened again over the weekend. Foreign ministers from Iran and major Gulf states had been scheduled to meet on the 14th to discuss reopening the strait, but Oman's foreign minister announced a postponement. The U.S. energy secretary also played down the likelihood that Gulf states would reach an agreement, renewing caution over crude supply disruptions.
Rising expectations of a U.S. rate increase added to the pressure on equities. U.S. headline and core CPI for August rose 0.4% and 0.3% from the previous month, respectively. With core CPI slightly exceeding market forecasts, the probability of a rate hike at the September Federal Open Market Committee meeting priced into futures markets jumped to 86% from 69%. The two-year U.S. Treasury yield hit its highest level since July 2024.
Concerns are also mounting that high oil prices and high interest rates could squeeze consumption. The University of Michigan consumer sentiment index for September came in at 47.8, below the market forecast of 52.5 and the lowest since May of this year. One-year inflation expectations rose to 4.6% from 4.0%, and five-year expectations edged up to 3.4% from 3.3%.
"Oil price gains have paused, but upward pressure remains after the meeting on the Strait of Hormuz was postponed," said Ahn So-eun, an analyst at KB Securities. "Core CPI came in above expectations, heightening concerns about a September rate hike, while high oil prices and high interest rates are again weighing on consumer spending."
