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A sharp sell-off in technology and semiconductor stocks triggered a wave of volatility across global markets, with South Korea's Kospi index tumbling 10% on Tuesday, June 23, triggering a circuit breaker that halted trading for 20 minutes Source: CNN. The plunge was driven by a more than 12% drop in the shares of chip giants Samsung Electronics and SK Hynix, which together account for about half of the Kospi's market value Source: CNN.
The rout began in Asia after a mild US tech sell-off on Monday, but quickly escalated into panic trading in Seoul. Japan's Nikkei 225 fell 3.6% on Tuesday, while Taiwan's Taiex dropped 2.5% Source: AP. The losses spread to Europe, with Frankfurt and Paris falling over 1% Source: emol. Wall Street also suffered: the Nasdaq composite fell 2.2% on Tuesday, and the S&P 500 lost 1.4% Source: CNN. The sell-off was fueled by concerns that AI-related stock valuations had become overextended after a nearly 100% rally in the Kospi this year Source: Portafolio.
However, markets quickly rebounded. On Wednesday, South Korea's Kospi recovered over 3%, with Samsung Electronics surging 9% and SK Hynix gaining 4% Source: CNBC. The rebound extended to Japan, where the Nikkei rose 4.1% on Thursday, driven by upbeat earnings from US chipmakers Qualcomm and Micron Source: AP. Analysts warned that the extreme swings signal instability. "When markets move so rapidly, in either direction, it's a sign of instability," said Michael McCarthy, market analyst at Moomoo Securities .
“South Korea's market plunge saw Samsung and SK Hynix tumble more than 12% as chipmakers drove losses across Asia.”
“South Korea's benchmark Kospi index was up 0.5% to 8,241.23, recovering slightly from its 10% decline on Tuesday.”
“Shares of Samsung Electronics rose over 9%, while SK Hynix gained more than 4%, recovering part of the more than 12% decline posted by both respectively on Tuesday.”
“"Price action in markets over the last seven trading days has been alarming, not just when it falls, but also when it rises," said Michael McCarthy, market analyst at Moomoo Securities Australia.”
The sell-off highlighted risks from leveraged trading by retail investors and uncertainty about the Federal Reserve's interest rate policy. Oil prices also fell amid progress in US-Iran peace talks, adding to the complex market picture Source: AP.
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