Korean airline stocks are broadly weaker in early trading. The decline appears to reflect growing concern about rising global oil prices as uncertainty over peace talks between the United States and Iran resurfaces.
At 10:01 a.m. on the 22nd, Korean Air Lines was trading on the main bourse at 26,850 won, down 875 won (3.13%) from the previous session.
At the same time, Hanjin KAL was down 3.14%, while Trinity Airways (-3.62%), Jin Air (-2.98%), Asiana Airlines (-2.04%), T'way Holdings (-1.13%), AK Holdings (-1.90%), and AIR BUSAN (-1.24%) and other airline-related shares were also showing weakness.
Airlines are considered among the sectors most sensitive to fluctuations in global oil prices. When oil prices rise, the burden of jet fuel expenses increases, which can hurt profitability.
Until recently, markets had priced in expectations that if a peace agreement were reached between the United States and Iran, easing geopolitical risks in the Middle East would stabilize global oil prices. However, noise in recent negotiations has somewhat weakened those expectations.
Iran's state-run IRNA news agency reported on the 21st (local time) that the Iranian delegation walked out of the talks held in Switzerland. Earlier, U.S. President Donald Trump warned on social media (SNS) that the United States could take strong military action if Iran failed to rein in the pro-Iran armed group Hezbollah.
Some, however, say it is too soon to conclude the talks have collapsed. According to AFP, a diplomatic source familiar with the negotiations said, "The Iranian delegation remains engaged in the talks and has not conveyed any intention to withdraw." Foreign media reported that the two sides were continuing dialogue through a mediator.