On Aug. 18, the KOSPI and other indices are displayed on a status board at the Hana Bank dealing room in Jung-gu, Seoul. Yonhap News
Samsung Electronics (005930.KS) and SK hynix (000660.KS) tumbled in premarket trading as fears over Middle East instability, driven by the U.S.-Iran conflict, and a surge in bond yields rattled market sentiment.
According to Nextrade on the 19th, Samsung Electronics traded at 256,500 won, down 12,000 won, or 4.47%, from the previous session during premarket hours from 8 a.m. to 8:50 a.m. SK hynix fell 98,000 won, or 5.90%, to 1.564 million won. Other large-cap stocks also weakened across the board, including SK Square (-7.31%), Samsung Electro-Mechanics (-6.39%), Hyundai Motor (-3.56%) and LG Energy Solution (-1.99%).
The sharp declines were attributed to Middle East tensions and the spike in bond yields. A failure to extend a U.S.-Iran ceasefire heightened geopolitical risks in the region. As oil prices climbed and inflationary pressure came into focus, a selloff in U.S. Treasurys pushed yields higher. The jump in bond yields sharply dampened appetite for risk assets, weighing on the market.
The U.S. 30-year Treasury yield climbed as high as 5.33% during the session, its highest level in 19 years since 2007. The U.S. 10-year Treasury yield, a benchmark for global market rates, hovered near 4.71%, close to its highest level since January 2005. International oil prices rose for a third straight day. Brent crude for October delivery and U.S. West Texas Intermediate (WTI) futures for September delivery settled at $91.02 and $84.95 a barrel, up 0.17% and 0.52% from the prior session, respectively.
On Wall Street, chip stocks fell sharply under pressure from profit-taking and high interest rates. Micron Technology (-7.06%), SanDisk (-8.89%) and Western Digital (-7.43%) all posted steep losses. SK hynix’s American depositary receipts (ADRs) dropped 9.20%, while the Philadelphia Semiconductor Index (SOX) declined 4.98%.
“We need to prepare for the possibility that sensitivity to U.S. 10-year and 30-year yields could temporarily increase,” said Han Ji-young, an analyst at Kiwoom Securities.