Asian Stocks Tumble as South Korea's KOSPI Plunges 8% on Tech and Geopolitical Fears

Asian stocks fell sharply on Wednesday, dragged down by a brutal selloff in the technology sector and deteriorating risk appetite after Iran launched missile attacks against U.S. forces. South Korea’s benchmark KOSPI led the regional decline, plunging more than 8% as investors reassessed lofty valuations in the artificial intelligence space.

Tech Rout Deepens Across Asia

The selloff in technology shares extended for a second day across major Asian markets amid concerns over mounting capital expenditures and intensifying competition in the semiconductor industry. The rout was most severe in South Korea, where the KOSPI has now fallen roughly 34% from its recent peak.

Key technology names recorded steep losses:

• SK Hynix Inc slumped more than 10%, despite reporting a record quarterly profit.
• Samsung Electronics fell more than 5%.
• In Japan, the Nikkei 225 dropped around 2%, with electronics makers like Murata Manufacturing and TDK Corp seeing significant declines.
• Taiwan's tech-heavy Taiwan Weighted index fell nearly 4%, with chip giant TSMC losing over 2%.

Geopolitical Tensions and Fed Outlook

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Investor sentiment was further soured by geopolitical developments after Iran launched fresh missile attacks, shattering a recent calm and pushing oil prices sharply higher. According to Investing.com, this revived concerns over global inflation just hours before the U.S. Federal Reserve is set to announce its latest policy decision.

While the Fed is widely expected to hold interest rates steady, markets are pricing in approximately a 33% probability of a future rate hike. The cautious mood was also reflected in U.S. futures, with Nasdaq 100 Futures falling 0.4% during Asian trading hours, ahead of key earnings reports from Microsoft and Meta Platforms.

Australia Bucks Regional Trend

In a notable exception to the regional downturn, Australia’s S&P/ASX 200 climbed to its highest level since early April. The gains were driven by softer-than-expected domestic inflation data, which prompted traders to scale back bets on another interest rate hike by the Reserve Bank of Australia.

Mining heavyweight Rio Tinto also provided a boost, climbing about 4.8% after reporting earnings that surpassed analyst expectations. Elsewhere in the region, markets in China posted more moderate losses, with the Shanghai Composite and CSI 300 indexes declining by just over 0.5%.