• South Korea’s KOSPI index fell 6.4% on Thursday, erasing much of the previous session’s gains and slipping into a bear market, as a U.S. chip-stock selloff deepened concerns about AI investment durability.
  • Korea Exchange briefly suspended trading in the KOSPI’s constituent stocks early in the session after the sharp decline.
  • Chipmakers SK Hynix and Samsung Electronics, which together account for about half of the capitalization-weighted index, fell 11% and 8.2%, respectively.
  • Oil prices extended gains as U.S. officials said President Trump is considering expanding military operations in Iran, including airstrikes and ground forces to seize Iranian islands near the Strait of Hormuz.

Oil gains as Trump weighs expanding military operations in Iran

Asia-Pacific equities broadly declined Thursday as a pullback in U.S. chip stocks fueled concerns about the longevity of artificial-intelligence enthusiasm, according to The Wall Street Journal. South Korea’s highly volatile market, home to chipmakers SK Hynix and Samsung Electronics, reversed much of its Wednesday gains.

The KOSPI’s 6.4% drop put the index into a bear market, defined as a decline of at least 20% from a recent high. SK Hynix declined 11% and Samsung Electronics fell 8.2% — the two companies collectively account for around half of the capitalization-weighted KOSPI. SK Hynix’s American depository receipts closed 9% lower overnight amid weakness in U.S. semiconductor stocks such as Micron Technology and Intel.

Japan’s Nikkei Stock Average declined 2.8%. Australia’s S&P/ASX 200 edged 0.3% lower. China’s Shanghai Composite dropped 0.6%, while Taiwan’s Taiex edged 0.1% lower. Hong Kong’s Hang Seng Index bucked the regional trend to rise 1.8%.

“The Nikkei and the Nasdaq composite have ridden the wave of AI enthusiasm, but now that trade seems buffeted by uncertainty and at risk of more declines,” Chris Beauchamp, chief market analyst at IG, said in an email cited by the Journal.

Asian currencies were mixed against the U.S. dollar. South Korea’s central bank raised its rates for the first time since 2023 in a widely expected move. Japan Finance Minister Satsuki Katayama reiterated that the government could “take appropriate action in the foreign-exchange market at any time as needed” to boost the weak yen, according to the Journal. The dollar was flat against both the won and the yen.

Commonwealth Bank of Australia’s Carol Kong flagged that the prospect of the U.S. and Iran returning to a “hot war” poses downside risks to the Australian dollar, the Journal reported. The Australian dollar was recently 0.2% lower at US$0.6994.

Oil prices extended gains as Middle East tensions remained high. President Trump is considering expanding U.S. military operations in Iran, U.S. officials told the Journal. Options include stepping up airstrikes and sending ground forces to seize Iranian islands near the Strait of Hormuz, the Journal reported.

ANZ Research analysts said in a note that continuing strikes in Iran raised concerns of further disruption to oil supplies. The conflict is heavily centered on the Strait of Hormuz, a waterway through which one-fifth of the world’s oil is typically transported, according to the Journal.

Front-month West Texas Intermediate crude oil futures gained 0.6% to US$80.07 a barrel, while front-month Brent added 0.4% to US$85.26 a barrel.