South Korea's benchmark stock index, the KOSPI, fell 7.28% to 5,571.27 by 10:13 a.m. Seoul time on Thursday, extending a six-session losing streak after hotter-than-expected US inflation data rattled global markets. According to Korea JoongAng Daily, the index opened 5.59% lower at 5,673.01, prompting an emergency trading halt as technology shares plummeted.
Key Takeaways
- The KOSPI slid 7.28% to 5,571.27, sitting 40% below its June 19 record high while maintaining a 31.87% gain for 2026.
- Exchange circuit breakers activated a five-minute program trading pause ("sidecar") at 9:08 a.m. after KOSPI 200 futures dropped 5% for one minute.
- US September CPI inflation hit 3.7%, topping the 3.6% consensus forecast from economists, with core CPI reaching 2.6%.
- Foreign investors net sold 285.6 billion won in early trading, pushing Samsung Electronics down 6.03% and SK Hynix down 7.61%.
US Inflation and AI Doubts Spur Broad Market Drop
The decline followed economic releases from the US Labor Department, which reported September Consumer Price Index (CPI) inflation at 3.7%, above expectations of 3.6%. Core inflation, which excludes food and energy costs, registered at 2.6%. The inflation surprise dented global risk appetite, following similar market reactions when US inflation rose to 3.7% in September.
During Wednesday's US stock trading session, major indices posted significant losses as investors evaluated rate hike risks alongside AI spending concerns. The S&P 500 declined 1.11%, the Nasdaq Composite fell 1.88%, and NVIDIA dropped more than 3%. Concurrently, Brent crude traded near $106 per barrel amid ongoing Middle East geopolitical tensions.
Korean Chipmakers Drop Amid Competition and Fed Fears
South Korea's semiconductor sector faced heavy selling pressure, compounded by market competition from China's ChangXin Memory Technologies. Samsung Electronics plunged 6.03% and SK Hynix fell 7.61% shortly after Thursday's open. The severe decline triggered a program trading curb at 9:08 a.m. when KOSPI 200 futures remained down 5% for a full minute, halting sell orders for five minutes.
Foreign institutional participants unloaded a net 285.6 billion won early in the trading session, reflecting broader regional market headwinds as South Korea faces economic pressure. The market weakness comes ahead of the Federal Reserve's upcoming rate decision on October 27 and 28, following its rate increase in September.
Why It Matters
The market drop highlights how sensitive global technology supply chains remain to US interest rate expectations. Higher borrowing costs directly impact technology firms financing capital-intensive artificial intelligence infrastructure with debt. If the Federal Reserve maintains an aggressive stance during its late-October meeting, tech sector valuations and risk-on asset markets could face continued downward pressure through the end of the quarter.
