South Korean shares faced a nearly 2% decline on Thursday due to increased market volatility triggered by rising tensions in the Middle East and uncertainties surrounding the direction of the United States’ monetary policy. The benchmark Korea Composite Stock Price Index (KOSPI) fell by 112.91 points, or 1.19 percent, reaching 5,812.12 by 11:20 a.m.
The Dow Jones Industrial Average experienced a 1.63% decrease, the Nasdaq Composite dropped by 1.46%, and the S&P 500 retreated by 1.36% overnight, as reported by Yonhap news agency. Investors’ risk appetite was impacted by Israel’s attack on Iran’s largest gas field, South Pars, and Iran’s retaliatory strike on a major liquefied natural gas site in Qatar, leading to a surge in global oil prices.
Market sentiment was further dampened by U.S. Federal Reserve Chair Jerome Powell’s comments following the decision to maintain the policy rate in the 3.5-3.75 percent range. Powell expressed concerns about the inflationary pressures arising from the surge in oil prices, indicating a cautious approach towards potential future rate cuts.
In Seoul, top-cap Samsung Electronics witnessed a 2.64% decline, while chipmaking rival SK hynix slipped by 3.12%. Hyundai Motor, a major auto manufacturer, saw a 3.3% drop, and its affiliate Kia experienced a 1.6% decrease. SK Square, an artificial intelligence (AI) investment firm, recorded a 2.7% dip, and LG Energy Solution, a leading battery maker, decreased by 1.69%.
Major defense company Hanwha Aerospace observed a 1.22% decline, and prominent shipbuilder HD Hyundai Heavy contracted by 2.54%. However, power plant manufacturer Doosan Enerbility emerged as one of the few gainers, rising by 0.84%. Financial shares showed some resilience, with KB Financial up by 1.1% and Shinhan Financial increasing by 0.42%.
The Korean won was trading at 1,496.9 won against the U.S. dollar at 11:20 a.m., marking a 13.8 won decrease from the previous session, briefly falling below the 1,500 won level against the dollar at the opening bell.
