Foreign exchange trader monitoring exchange rates in the dealing room of Korea Exchange Bank in Seoul
Jung Young Jae | AFP | Getty Images
South Korea’s Kospi plunged more than 12% on Wednesday, marking its worst day in decades and extending a steep decline from the previous session as wars in the Middle East escalate.
The Korea Exchange temporarily suspended trading in the Kospi index on Wednesday. A circuit breaker was also activated on the KOSDAQ market, and the KOSDAQ market also fell by about 13%.
SK Hynix and Samsung Electronics, leading companies on the Kospi index, fell 5% and 7%, respectively.
The Korean market soared more than 75% during last year’s turmoil, and continued to rise into the new year, with Kospi hitting a new high thanks to support from chip giants whose stock prices soared due to strong demand for memory chips.
“The decline in KOSPI could be mainly due to the single-stock concentration seen in the Korean market,” said Lorraine Tan, director of equity research Asia at Morningstar.
Memory giants Samsung and SK Hynix account for nearly 50% of the index, according to Morningstar data.
“While we believe the stock price decline is partly due to profit-taking after a strong rally in a risk-off environment, it also reflects growing concerns that the pace of AI data center adoption will slow as energy costs are significantly higher than for regular data centers.”
Japanese Nikkei Stock Average fell 4.6%, and TOPIX fell more than 4%.
Investors in the region will also be keeping an eye on China’s annual parliamentary meeting of policymakers, which begins later in the day.
The gathering, known as the “Second Session,” will consist of a consultative meeting that begins later in the day and the National People’s Congress, which is scheduled to open on Thursday. Chinese Premier Li Qiang is scheduled to announce a series of economic goals at the National People’s Congress, most of which were finalized at the December meeting.
Australia’s S&P/ASX 200 fell 1.81%. Hong Kong hansen index fell almost 2%, while the mainland’s CSI 300 fell 1%.
An official survey on Wednesday revealed that Chinese factory activity slumped in February as manufacturers suspended production and cargo shipments to celebrate the long holiday.
The official manufacturing purchasing managers index fell to 49 in February, lower than economists’ expectations of 49.1, the Office for National Statistics said.
Oil prices widened, with U.S. crude oil futures up 0.87% to $75.21 a barrel, while Brent crude rose 5.43% to $81.96 a barrel amid the escalating conflict as Iran seeks to close off the Strait of Hormuz.
Crude oil prices since the beginning of the year
A senior commander in Iran’s Revolutionary Guards said on Monday that a vital artery had been shut down and warned that ships attempting to pass through the waterway would be targeted, according to Iranian media.
US President Donald Trump said on Tuesday afternoon that the US Navy would escort tankers through the Strait of Hormuz if necessary.
“No matter what, the United States will ensure the free flow of energy to the world,” he said in a post on Truth Social. “America’s economic and military power is the greatest on earth, and more action will follow.”
Prices of precious metals have increased. spot gold Spot rose 1.85% to $5,180 an ounce. silver It rose more than 3% to $85.1 an ounce.
Overnight, socks prices in the U.S. again swung wildly as concerns over the protracted conflict between the U.S. and Iran roiled the market.
The Dow Jones Industrial Average fell 403.51 points, or 0.83%, to end at 48,501.27. The S&P 500 Index fell 0.94% to close at 6,816.63, and the Nasdaq Composite Index fell 1.02% to close at 22,516.69. At the day’s lows, the S&P 500 was down 2.5% and the Nasdaq was down about 2.7%. The Dow Jones Industrial Average (30 stocks) fell more than 1,200 points (approximately 2.6%) to its bottom.
—CNBC’s Sean Conlon and Pia Singh contributed to this report.
