Kospi sinks over 5% on tech losses due to U.S.-Iran peace deal uncertainty

Stocks dipped by more than 5 percent as investors locked in profits from a recent tech-led rally while monitoring uncertainty over U.S.-Iran peace negotiations. The local currency weakened sharply against the dollar.

The benchmark Kospi lost 478.82 points, or 5.54 percent, to close at 8,160.59, retreating for a second consecutive session.

The Korea Exchange triggered a sidecar, or a temporary halt in program trading, for the Kospi, which opened 3.66 percent lower, for five minutes at 9:08 a.m. after the Kospi 200 Futures index fell 5 percent or more for at least one minute.

Trade volume was moderate at 446.37 million shares worth 45.73 trillion won ($29.7 billion), with losers outnumbering winners 671 to 224.

Foreign and institutional investors sold a net 3.5 trillion won and 942.4 billion won, respectively, while individuals bought a net 4.22 trillion won.

Overnight, major U.S. stocks closed mixed.

The Dow Jones Industrial Average rose 1.73 percent, and the S&P 500 added 0.41 percent to 7,584.31. The tech-heavy Nasdaq composite slipped 0.09 percent as declines in stocks related to AI weighed on the index.

Broadcom tumbled more than 12 percent after the U.S. chipmaker's quarterly results, and outlook for AI-related revenue fell short of investors' lofty expectations.

Oil prices retreated after three consecutive sessions of gains as investor sentiment improved following reports that Israel had agreed to a conditional cease-fire with Lebanon.

In Seoul, most large-cap stocks ended lower as foreign investors extended their selling streak to a 20th consecutive session.

“Technology heavyweights tracked declines in U.S. semiconductor stocks after Broadcom tumbled more than 10 percent on weaker-than-expected results and guidance, while foreign investors continued to sell Korean equities, following this year's strong rally,” Han Ji-young, an analyst at Kiwoom Securities, said.

“Some investors also appear to be raising cash ahead of several major events scheduled for next week, including SpaceX's anticipated listing on the Nasdaq market,” he added.

In Seoul, large-cap shares closed lower.

Top market-cap Samsung Electronics sank 6.4 percent to 329,000 won, and its rival chipmaker SK hynix plunged 9.92 percent to 2.07 million won.

AI investment firm SK Square dipped 7.57 percent to 1,258,000 won, while top automaker Hyundai Motor held steady at 700,000 won.

In contrast, financial stocks gained on expectations of a potential interest rate hike amid mounting inflationary pressures.

KB Financial surged 4.51 percent to 171,600 won, and Shinhan Financial Group advanced 7.39 percent to 107,500 won.

The local currency weakened by 9.4 won to trade at 1,539.1 won against the greenback from the previous session.

Yonhap