▲ Real-time Kospi and Kosdaq indices are displayed on the electronic board at the dealing room of the Hana Bank headquarters in Jung-gu, Seoul, on the 2nd, when the Kospi opened more than 3% lower.
The escalating armed conflict between the United States and Iran is sharply driving up government bond yields in major countries, which were already unstable.
International oil prices have surpassed the 90-dollar mark.
As investors' risk-off sentiment grows, stock markets around the world, including South Korea, have simultaneously turned downward.
According to the Korea Exchange and financial information service provider Yonhap Infomax today (the 2nd), the Kospi closed the session down 3.99% from the previous day at 6,562.72.
Starting 3.08% lower at 6,625.47, the index briefly rose to 6,694.57 (-2.07%) in early trading, but subsequently expanded its losses steadily and continuously.
Foreigners and institutions net sold 1.9196 trillion won and 2.0434 trillion won, respectively, strongly pulling down the index.
On the other hand, individuals and other corporate entities net bought 2.3023 trillion won and 1.6504 trillion won, respectively, propping up the downside.
It appears that retail investors used the situation—where big players reduced their risk asset weight to manage external risks—as an opportunity for bargain hunting or short-term trading.
The recent "weak in the morning, strong in the afternoon" pattern, driven by other corporate entities net buying in the 1-trillion-won range for nine consecutive sessions up until the previous day due to Samsung Electronics buying treasury shares for employee stock compensation and SK Hynix buying and retiring treasury shares, likely had an impact. However, today's session continued its downward expansion straight through without a rebound.
Major Asian stock markets are in a similar situation.
Japan's Nikkei 225 Stock Average plummeted 2.85% to close at 64,325.64, and Taiwan's Weighted Index fell 1.67% to 46,164.72.
As of 4:15 PM Korea time, China's Shanghai Composite Index and Shenzhen Composite Index are down 0.97% and 1.45%, respectively, while Hong Kong's Hang Seng Index is recording a decline of 0.30%.
It appears that a sharp correction was triggered as the economic and military offensive by the US targeting Iran escalated rapidly, causing international oil prices and US Treasury yields to soar.
On August 24 of last month, the US declared the "Maximum Pressure Operation" reinforcing secondary sanctions to cut off the funding sources of the Iranian regime and military, and on the 30th of the same month, it airstriked a rocket launcher for laying naval mines on Larak Island, a strategic stronghold in the Strait of Hormuz in southern Iran.
Even last night, military operations began in earnest, bombarding major ports and energy infrastructure in southern Iran such as Bandar Abbas, Qeshm Island, and Asaluyeh.
As Iran repeatedly retaliated with ballistic missiles and suicide drones targeting US military bases in places like Jordan and Bahrain, international oil prices recorded a surge of around 5%.
West Texas Intermediate (WTI) crude oil futures for October delivery closed up 5.20% at $90.22 a barrel at the New York Mercantile Exchange last night, and continued to show strength into today, trading up 0.32% from the previous session at $90.51 as of this time.
Concerns over inflation driven by high oil prices grew, pushing the yield on 10-year US Treasury notes up 4.80 basis points (1 bp = 0.01 percentage point) to close at 4.799%, the highest level since January of last year.
Long-term bond yields in other major countries such as Japan, the United Kingdom, Germany, and France are also soaring to record highs.
Accordingly, the three major US stock indices (Dow -0.79%, S&P 500 -0.71%, Nasdaq -1.03%) declined together, and that atmosphere is believed to have carried over to the Asian stock markets.
Shin Hyun-yong and Lee Jae-won, analysts at Yuanta Securities, reported, "Due to US strikes on Iran pushing oil prices to a 6-week high and the 10-year Treasury yield jumping to its highest since January 2025, it was a risk-off day where growth stocks faced selling for the third consecutive session," and added, "It is notable that even safe-haven gold (-1.25%) was pushed down by rising yields."
Han Ji-young, an analyst at Kiom Securities, also diagnosed, "Negative sensitivity to macro variables such as oil prices and interest rates has heightened," and added, "US Treasury Secretary Scott Bessent stepped in to calm markets by saying the situation is not severe, but psychological burdens are compounding as oil prices and interest rates reach specific levels."
She stated, "For the time being, it seems we need to respond while checking whether US-Iran conflicts ease and whether long-term market interest rates in advanced countries like the US and Japan stabilize."
However, some point out that it remains uncertain whether President Donald Trump, ahead of the November midterm elections, can push his offensive targeting Iran to an extreme level.
This is because President Trump has repeatedly iterated the "TACO" (Trump Always Caves) pattern whenever situations worsened following his invasion of Iran alongside Israel in late February of this year.
Analyst Han advised, "Another point to consider is that the market had already priced in a high probability of the US 10-year yield entering the 5.0% range within the year," adding, "Ultimately, because this is currently a macro uncertainty zone that the market can absorb, it is right to maintain existing stock weights and respond through observation or phased purchases in the event of further plunges."
(Photo: Yonhap News)
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