KOSPI plunges over 8% as Samsung, SK Hynix extend losses

Chip stocks extended a global sell-off on Thursday, with South Korea’s KOSPI share index plunging more than 8% as the rout in semiconductor and AI-linked shares deepened. Samsung Electronics fell 9% and SK Hynix dropped 10.5%, leading the declines in Seoul and extending recent losses for the country’s two largest chipmakers.

Japan’s Nikkei 225 slid 4.5% in late trading, tracking the broader regional move.

The Asian declines followed a drop on Wall Street on Wednesday, when the S&P 500 index fell 1.1% and the Nasdaq Composite lost 1.9%. Dell’s shares plunged 11% on Wednesday, a drop CNBC attributed to mounting concerns that enterprise spending on artificial intelligence will not justify the AI buildout.

Wednesday’s US inflation data drove the renewed selling, showing consumer prices rose 3.7% year-over-year, according to FRED’s reading of the Consumer Price Index for all urban consumers. The reading alarmed traders, who said it makes it more likely that the Federal Reserve will raise interest rates soon, possibly at the end of this month.

Chris Weston, an analyst at brokerage Pepperstone, said the inflation print reinforced the higher-for-longer rates narrative, with sellers emerging across risk assets and interest rate-sensitive equities coming under renewed pressure. “Further evidence of right-tail inflation risk in the US has reinforced the higher-for-longer rates narrative, with sellers emerging across risk assets and interest rate-sensitive equities coming under renewed pressure,” Weston said, according to The Guardian.

“The breadth of price pressures across the CPI basket has been particularly concerning, challenging a market desperately in need of evidence of disinflation,” Weston added.

The inflation pressures are also expected to weigh on policymakers at the IMF’s Annual Meeting in Bangkok, which continued on Thursday. The UK was due to release August GDP data at 7am BST, which was expected to show a 0.1% fall for the month after a strong July. Later in the day, releases were scheduled for eurozone industrial production for August at 10am BST, US initial jobless claims at 1:30pm BST, and the US producer price index for September at 1:30pm BST.