South Korea's benchmark KOSPI index fell sharply on Thursday, dropping below the 7,000 level just one day after reclaiming it for the first time in over a month. The decline was driven by Brent crude holding above $100 a barrel and US Treasury yields remaining near multi-year highs, which reignited inflation concerns and dampened risk appetite across the region.
By late morning in Seoul, the KOSPI was down 1.28% at 6,961.23. Major blue-chip stocks were hit hard: Samsung Electronics fell 1.3%, SK Hynix slipped 0.59%, Hyundai Motor lost 1.55%, and LG Energy Solution dropped 2.83%. Foreign investors sold a net 496.4 billion won of shares, while institutions unloaded over 1 trillion won, though retail investors stepped in as net buyers.
Oil shock pressures import-dependent market
South Korea's heavy reliance on imported crude and natural gas makes its equity market particularly vulnerable to energy price spikes. Brent crude traded above $101 after another escalation in Middle East hostilities, reinforcing fears that higher fuel costs will feed through to transportation, manufacturing, and consumer prices. Brent settled at $101.21 on Wednesday, while WTI reached $96.05.
The pressure was broad-based, affecting even the heavyweight technology names that had driven the KOSPI to close at 7,051.64 on Wednesday. The strong AI and memory-chip narrative that had supported the market was overshadowed by the oil and yield headwinds. According to Seoul Economic Daily, Kiwoom Securities analyst Han Ji-young expects Korean equities to give back part of Wednesday's gains, though he sees support from Samsung and SK Hynix share buybacks and the return of foreign investors as net buyers this month.
Quadruple witching adds volatility
Thursday also marked a quadruple-witching session in South Korea, with index futures, index options, single-stock futures, and single-stock options expiring simultaneously. This event amplified swings in program trading and foreign futures flows. The KOSPI briefly turned positive after opening 0.18% lower before selling accelerated later in the morning.
The timing is awkward because the index had only just broken back above 7,000. Market data shows that retail investors sold 16.84 trillion won over the five sessions through Wednesday, while institutions, foreign investors, and corporate treasury-share purchases absorbed most of that supply. The key question now is whether 7,000 becomes resistance again or whether strong semiconductor earnings expectations bring buyers back quickly.
Wider Asia weakens as yields stay elevated
The pressure was regional. The broader MSCI Asia-Pacific gauge fell about 0.4%, while Japan's Nikkei 225 dropped 0.6% to 64,759.80. Australian equities also retreated as higher energy costs weakened risk appetite.
Bond yields added another headwind. The US 10-year Treasury yield remained near 4.84%, close to its highest since 2023, after a $6 billion Treasury buyback of longer-dated debt disappointed investors hoping for a larger intervention. Raymond James strategist Tracey Manzi told The Wall Street Journal that expectations had been centered closer to a $7 billion-$8 billion buyback, leaving the announced amount short of what many bond investors wanted.
US producer-price data are due Thursday, followed by CPI on Friday. These releases could provide further direction for markets. For more on the broader market impact of oil and yields, see our coverage of Dow drops 400 points and why stocks stayed calm despite oil's surge. Also, check out how KOSPI reclaimed 7,000 earlier this week.
This article is for informational purposes only and does not constitute financial advice.
