On the 8th, the KOSPI index plunged at the open, falling below the 8,000 mark. After last week's U.S. "jobs surprise" and a sharp sell-off in tech stocks, investor sentiment in Korea's stock market also cooled rapidly.
That day, the KOSPI started trading at 8,048.09, down 112.5 points (1.38%) from the previous trading day, but it collapsed more than 8% right after the open to 7,477.46. As most of the top market-cap stocks crashed just after the open, the volatility interruption mechanism (VI) was triggered and single-price trading was conducted for two minutes, but once the VI was lifted, the index resumed its plunge.
As the index plunged, level-1 circuit breakers that temporarily halt stock trading were triggered. All stock transactions in the main board were suspended for 20 minutes.
In the main board, foreign investors' net selling continues. Foreigners have net sold 230 billion won, while institutions and individuals are net buying.
The day's stock slump is seen as reflecting the impact of the U.S. market's plunge over the weekend on concerns about Federal Reserve rate hikes.
Over the weekend, the U.S. Labor Department released May jobs data, which showed considerable strength in the U.S. labor market. May nonfarm payrolls increased by 172,000 from the prior month, more than double the market forecast of 85,000. Even the April figure was revised up by 64,000 from the previous release, which is seen as underscoring the resilience of the U.S. economy.
This robust hiring fueled concerns about Federal Reserve tightening. According to CME FedWatch, the market has cut the probability of a rate cut within the year to around 1% and has begun to price in the possibility of one or two rate hikes this year.
On expectations that the Fed could tighten more than anticipated, the U.S. 10-year Government Bonds yield rose again and the dollar turned stronger. As the dollar strengthened, the won-dollar exchange rate also surged. The won-dollar rate jumped to about 1,560 won, the highest level since the global financial crisis.
In particular, as tech stocks plunged, the rally in Korea's market that had been led by large semiconductor names also appeared to hit the brakes. Over the weekend, the Philadelphia Semiconductor Index tumbled 10.26%. Alongside concerns about Broadcom's (-7.92%) slowing profitability, Micron Technology (-13.25%), which had soared more than 900% over the past year, slumped as it faced the narrative of the "memory boom peak."
Most of the top market-cap names on the main board are showing steep declines. As of 9:20 a.m., Samsung Electronics is trading at 298,500 won, down 30,500 won (9.27%) from the previous trading day. SK hynix is also trading at 1,904,000 won, down 166,000 won (8.02%).
The KOSDAQ index started trading at 959.61, down 42.83 points (4.27%) from the previous trading day (1,002.44). After dropping more than 7% right after the open, a temporary suspension of program sell quotes (sell-sidecar) was triggered.