KOSPI Rebounds to Record High After Sharp One-Day Drop

South Korea's KOSPI index experienced dramatic volatility over two sessions, first snapping a five-day winning streak with a sharp decline before roaring back to a new record closing high. On Tuesday, May 12, the index fell 179.09 points, or 2.29 percent, to close at 7,643.15. The sell-off was driven by profit-taking in technology and chemical sectors, with Lotte Chemical, Samsung SDI, and LG Chem posting significant losses. Global sentiment deteriorated as crude oil prices surged above $100 a barrel amid the closure of the Strait of Hormuz due to the conflict between the United States and Iran. Additional pressure came from a U.S. Labor Department report showing the fastest annual consumer price growth since May 2023, which reduced expectations for near-term interest rate cuts.

The very next day, Wednesday, May 13, the KOSPI erased its losses and then some, rising 200.86 points, or 2.63 percent, to finish at 7,844.01 — a new record close. The rally was led by technology stocks and automobile producers, with SK Hynix surging 7.68 percent, Hyundai Motor soaring 9.91 percent, and Samsung Electronics gaining 1.79 percent. Investor sentiment improved on hopes for an end to Middle East hostilities and upcoming negotiations between the presidents of the United States and China. Meanwhile, U.S. markets showed mixed results after a separate Labor Department report revealed a sharper-than-expected jump in producer prices for April, the largest increase since March 2022.