South Korea halts trading as KOSPI index crashes over 8%
What's the story
South Korea's benchmark stock index, the KOSPI, witnessed a major crash on Monday. The index plunged over 8%, triggering a circuit breaker and forcing a temporary halt in trading. The fall was mainly due to a global technology-led selloff that affected Asian markets and semiconductor shares. An emergency meeting was also convened by the exchanges to evaluate the growing volatility and discuss measures to ensure operational stability in the markets.
Investor response
Tech and semiconductor sector heavily impacted
The KOSPI's fall was largely due to heavy selling in South Korea's tech and semiconductor sector, which is a major part of the country's export-driven economy. Investors reacted to steep losses on Wall Street last week, where tech stocks saw their worst rout in months amid fears that the US Federal Reserve could keep interest rates higher for longer. The selloff ended a nine-week rally in US equities fueled by AI optimism and lower interest rate expectations.
Market anticipation
Asian markets prepare for broad-based losses
Asian markets prepared for broad-based losses after Wall Street's sharp reversal. Futures markets indicated steep declines for Japanese and South Korean equities before trading began. The market turbulence was triggered by a stronger-than-expected US employment report for May, which led traders to reassess the likelihood of Federal Reserve interest rate cuts this year.
Market pressures
US Treasury yields rise sharply; geopolitical tensions add to jitters
US Treasury yields rose sharply after the jobs report, with two-year yields rising over 11 basis points on Friday as traders priced in tighter monetary policy. Higher interest rates usually hit tech stocks harder as they discount future earnings, making growth-oriented companies less appealing to investors. Geopolitical tensions in West Asia also added to market jitters, with oil prices surging by over 3% after Israel struck Beirut and Iran retaliated against Israeli targets.