Seoul: South Korean shares traded nearly 2 percent lower late Thursday morning on heightened market volatility sparked by escalating tensions in the Middle East and uncertainties surrounding the United States' monetary policy direction, despite its rate freeze decision. The benchmark Korea Composite Stock Price Index (KOSPI) dropped 112.91 points, or 1.19 percent, to 5,812.12 as of 11:20 a.m.
According to Yonhap News Agency, the overnight performance of major U.S. indices mirrored the downturn in Seoul. The Dow Jones Industrial Average dipped 1.63 percent, the tech-heavy Nasdaq Composite slid 1.46 percent, and the S and P 500 pulled back 1.36 percent. The market's risk appetite was weakened 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, which drove up global oil prices.
U.S. Federal Reserve Chair Jerome Powell's comments after the Fed's decision to maintain its policy rate in the 3.5-3.75 percent range also contributed to the negative market sentiment. Powell noted that the surge in oil prices has increased inflationary pressures, indicating a cautious stance on the timing of future rate cuts.
In Seoul, major stocks experienced declines. Market top-cap Samsung Electronics lost 2.64 percent, while its chipmaking rival SK hynix slipped 3.12 percent. Auto giant Hyundai Motor shed 3.3 percent, and its sister company Kia went down 1.6 percent. The artificial intelligence investment firm SK Square dipped 2.7 percent, and leading battery maker LG Energy Solution decreased 1.69 percent.
Other significant losses were seen in defense and manufacturing sectors, with major defense firm Hanwha Aerospace dropping 1.22 percent and leading shipbuilder HD Hyundai Heavy contracting 2.54 percent. However, power plant manufacturer Doosan Enerbility was among the few gainers, rising 0.84 percent. Financial shares showed resilience, with KB Financial up 1.1 percent and Shinhan Financial up 0.42 percent.
The Korean won was trading at 1,496.9 won against the U.S. dollar at 11:20 a.m., down 13.8 won from the previous session. The won initially fell past the 1,500 won level against the dollar at the opening bell.