[Edaily Reporter Kim Hyung-il ] The KOSPI opened with a sharp drop of over 3% due to soaring international oil prices caused by escalating geopolitical tensions in the Middle East and rising global government bond yields. The KOSDAQ also opened more than 2% lower, but both indices have partially recovered from their early losses. With foreign and institutional investors both net sellers on the KOSPI, weakness is evident primarily among large-cap stocks with the highest market capitalizations.

According to MP Doctor on the 2nd, as of 9:21 a.m., the KOSPI stood at 6,662.88, down 172.92 points (2.53%) from the previous trading day. The KOSPI opened at 6,625.47, down 210.33 points (3.08%) from the previous trading day. Although it has since partially recovered, declining stocks significantly outnumber the rest, with 145 stocks up, 31 unchanged, and 720 down.

By investor type, retail investors are net buyers of 797.9 billion won. Foreign investors and institutions are net sellers of 459.1 billion won and 442.3 billion won, respectively, while other corporate investors—which have recently been propping up the index—are net buyers of 99.8 billion won.

The weakness among large-cap stocks with the highest market capitalization is particularly noticeable. KOSPI large-caps are down 2.35%, a steeper decline than mid-caps (-1.6%) and small-caps (-0.83%). SamsungElectronics(005930)is down 2.87%, and SK hynix(000660)(-2.3%), SKSQUARE(402340)(-4.31%), and HyundaiMotor(005380)(-3.87%) are also trading lower. In contrast, SAMSUNG C&T CORPORATION(028260)(+0.26%) and KB Financial Group(105560)(+0.58%) are trading higher.

By sector, transportation equipment and parts are down 3.25%, recording the largest decline. General consumer goods (-2.73%), construction (-2.64%), machinery and equipment (-2.52%), IT services (-2.48%), and electrical and electronics (-2.43%) are also down by more than 2%. The chemicals sector is down 1.57%.

The KOSDAQ also started the day with a sharp drop but has since narrowed its losses. The KOSDAQ opened at 802.80, down 18.45 points (2.25%), and as of 9:21 a.m., it stands at 812.32, down 8.93 points (1.09%). With 340 stocks up, 96 unchanged, and 1,273 down, declining stocks are significantly outnumbering rising ones. Three stocks have hit their upper price limit.

Most of the top-market-cap stocks on the KOSDAQ are also trading lower. Alteogen Inc.(196170)is down 0.33%, ECOPRO CO., LTD(086520)is down 2.29%, ECOPRO BM CO., LTD.(247540)is down 0.6%, and Rainbow Robotics(277810)is down 1.78%. HLB INC.(028300)is also down 2.5%. On the other hand, JUSUNG ENGINEERING Co.,Ltd. (+0.92%), EO Technics Co., Ltd. (+0.76%), and Celltrion (+0.24%) are on the rise.

In terms of supply and demand on the KOSDAQ, retail investors are net buyers of 19.3 billion won, foreign investors are net buyers of 21.6 billion won, and institutional investors are net sellers of 43.3 billion won.

The factors weighing on the domestic stock market today include weakness in the U.S. stock market and rising oil prices and interest rates stemming from geopolitical tensions in the Middle East. On the 1st (local time), the three major U.S. stock indices all fell. The Dow Jones Industrial Average fell 0.79%, the S&P 500 index dropped 0.71%, and the Nasdaq Composite Index declined 1.03%. The Philadelphia Semiconductor Index also fell 2.1%.

International oil prices surged as military clashes between the U.S. and Iran intensified once again. Geopolitical tensions persisted as the U.S. launched additional airstrikes against Iran just two days after the previous attack, and Iran responded with retaliatory strikes. West Texas Intermediate (WTI) crude for October delivery closed at $90.22 per barrel, up 5.2%, while Brent crude for November delivery rose 4.6% to $94.65.

Yields on government bonds in major economies also rose as concerns over inflation driven by high oil prices coincided with a global sell-off in government bonds. The yield on the U.S. 10-year Treasury note rose as high as 4.79% during the session, while Japan’s 10-year yield surpassed 3% for the first time since 1996. The U.K.’s 10-year yield rose to 5.25%, and Germany’s 10-year yield also climbed to around 3.35%.

Rising oil prices and soaring government bond yields weighed on interest-rate-sensitive tech and semiconductor stocks. SK hynix American Depositary Receipts (ADRs) fell 2.31%, AMD dropped 2.36%, and Micron declined 2.64%.

U.S. economic indicators showed signs of an economic slowdown. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) for August stood at 54.6, down 1 point from 55.6 in July. While the manufacturing sector remained in expansion for the eighth consecutive month, the pace of growth slowed as the new orders index and employment index declined.

The number of job openings in July remained largely unchanged at 7,272,000. Hiring stood at 5.1 million, while voluntary resignations totaled 3.1 million; the number of job openings in June was also revised downward from the previously reported 7.359 million to 7.182 million. Analysts note that the “low-hiring, low-layoff” phenomenon—in which companies are neither actively expanding their workforce nor engaging in large-scale layoffs—continues.

Construction spending in July also fell to a seasonally adjusted annual rate of $2.1576 trillion, down 0.5% from the previous month and 3.8% from the same month last year. Meanwhile, the Institute for Supply Management (ISM) Manufacturing Price Index remained high at 71.1, indicating that an economic slowdown and inflationary pressures are occurring simultaneously.

Han Ji-young, an analyst at KIWOOM Securities, stated, “Sensitivity to negative macroeconomic variables, such as oil prices and interest rates, has increased,” adding, “We need to monitor whether tensions between the U.S. and Iran ease and whether long-term market interest rates in major economies, such as the U.S. and Japan, stabilize.” She went on to assess, “With August exports up 68.7% year-over-year—including a 209% surge in semiconductor exports—the fundamentals remain solid without any significant deterioration.”