Tech Selloff Spreads to Asia: Korean Stocks Plunge 3% as Chips, Oil Refiners Lead Losses
TREE NEWS reports: A wave of selling in technology shares swept across Asia on Tuesday, with South Korea’s benchmark Kospi index falling more than 3% at the open before paring losses to around 2.7%. The selloff was triggered by disappointing earnings guidance from Apple and a sharp overnight decline in U.S. semiconductor stocks, compounded by a steep drop in crude oil prices as geopolitical tensions eased.
The MSCI Asia-Pacific index slipped 0.6%, while the MSCI Emerging Markets Asia index dropped over 1%. Australia’s S&P/ASX 200 was roughly flat, and Japanese markets were closed for a public holiday. The tech-heavy selling hit semiconductor supply chains, battery materials, and oil refining stocks particularly hard.
Market Implications
The rout in Korean equities underscores how quickly sentiment can turn in the global tech supply chain. Apple’s cautious outlook, combined with weakness in U.S. memory and optical communications giants, transmitted directly to Korean upstream suppliers. Daeduck Electronics, a leader in high-end printed circuit boards and packaging substrates, plunged 11.16%, while semiconductor test equipment maker DI tumbled 9.88%. Samsung Electronics fell as much as 5%, and SK Hynix also dropped sharply, dragging the broader index.
Oil refiners were hit by a separate shock: Brent crude extended its decline, falling 0.2% to $104.61 a barrel after a 7.6% single-day drop. The slide followed comments from Iran’s president that he had been authorized by the Supreme Leader to expand negotiating powers, and hints from U.S. President Trump that talks were progressing. S-Oil, a major Korean refiner, sank 10.46%, while LPG distributor SK Gas lost 9.00%.
Bond markets were relatively calm. Australia’s 10-year yield edged up 1 basis point to 5.14% ahead of a widely expected 25 basis point rate hike by the Reserve Bank of Australia, which would lift the cash rate to 4.85%, an 18-year high. Investors will scrutinize Governor Michele Bullock’s press conference for clues on the policy path.
Currency markets were steady, with the dollar index little changed, the euro near $1.1181, and the yen at 157.92 per dollar. Bitcoin rose 0.2% to $76,860, while spot gold dipped 0.08% to $3,943.39 an ounce.
Attention is shifting to the upcoming U.S. midterm elections. Prediction markets suggest Democrats have a nearly 75% chance of winning the Senate. JPMorgan warned that a Democratic sweep of both chambers could pressure AI-related stocks. Ryan Detrick, chief market strategist at Carson, noted that markets often breathe a sigh of relief once election results are clear, but a landslide by either party could be difficult to digest.
Matt Maley of Miller Tabak said: “This will be a crucial week for markets, with political and geopolitical factors overlapping, and doubts about AI investment returns may matter more than historical patterns.”
Key Takeaways for Investors
- Tech supply chain vulnerability: The sharp declines in Korean chip and component makers highlight how quickly negative sentiment from U.S. tech giants can cascade through global supply chains. Investors should monitor earnings guidance from major U.S. tech firms for further signals.
- Oil price volatility: Geopolitical de-escalation can trigger rapid drops in crude, pressuring refiners and energy stocks. Diversification within energy and attention to geopolitical headlines remain crucial.
- Central bank watch: The RBA’s expected hike and Bullock’s commentary will be key for Australian bonds and the currency. Global rate differentials could influence capital flows.
- Political risk: The U.S. midterms add another layer of uncertainty, particularly for AI and tech stocks. A Democratic sweep could lead to regulatory pressures, while a Republican surprise might alter trade and fiscal policy expectations.
- Safe havens mixed: Bitcoin’s modest gain alongside steady bonds suggests investors are not in full risk-off mode, but gold’s slight dip indicates cautious positioning.
