KOSPI plunges more than 2% early on ‘oil, Powell’ shock… won-dollar rate climbs above 1,500

Israel bombs Iran’s largest gas field

Iran retaliates by striking energy facilities in neighboring countries

The KOSPI is tumbling early on March 19 as a spike in oil prices rattles investor sentiment.

As of 9:02 a.m., the KOSPI was down 70.09 points, or 2.87%, from the previous session at 5,754.94. The index opened down 2.76%.

Oil prices, which had shown signs of stabilizing, jumped sharply on the day. The move came after Israel bombed Iran’s largest gas field and Iran, in retaliation, launched air strikes on energy facilities in neighboring countries.

Brent crude futures for May delivery, the international benchmark, settled at $107.38 a barrel, up 3.8% from the prior session. U.S. West Texas Intermediate (WTI) futures for April delivery settled at $96.32 a barrel, up 0.1%.

Israel struck South Pars, Iran’s largest gas field, and a natural-gas refining complex in Asaluyeh on Iran’s southwestern coast. Iran retaliated by launching missile attacks on Qatar’s gas hub facilities, as Qatar accounts for 20% of global liquefied natural gas (LNG) supply.

At the March meeting of the Federal Open Market Committee (FOMC), which concluded on the day, the U.S. policy rate was left unchanged at 3.50%–3.75%. Federal Reserve Chair Jerome Powell voiced concern that rising oil prices could add to inflation pressures and weigh on U.S. economic growth.

U.S. stocks sold off, with all three major indexes falling more than 1% on a widening Middle East conflict, surging oil prices, and Powell’s hawkish remarks.

At this hour, in the main board market, foreign investors and institutions are net sellers of 578.7 billion won and 299.4 billion won, respectively. Retail investors are net buyers by 860.3 billion won.

Top KOSPI market-cap stocks are broadly lower. Despite Micron’s surprise earnings, Samsung Electronics and SK Hynix were down 3.36% and 3.41%, respectively, early in the session. Hyundai Motor, LG Energy Solution, Samsung Biologics, Hanwha Aerospace, and Doosan Enerbility also turned lower.

The KOSDAQ is also down more than 1%. At this hour, the index was down 1.68% from the prior session at 1,144.77. In the KOSDAQ market, institutions and retail investors are net sellers of 28.1 billion won and 18.5 billion won, respectively, while foreigners alone are net buyers by 57.6 billion won.

The won-dollar exchange rate opened sharply higher. In Seoul’s FX market, the won-dollar rate opened at 1,505.0 won, up 21.9 won from the previous session.

Noh Jeong-dong, Hankyung.com reporter dong2@hankyung.com