South Korea's KOSPI Ekes Out Gain After Wild Session As Wall Street Rally Eases Rate Fears Despite Iran War

SEOUL — South Korea's benchmark KOSPI index closed higher Thursday after a turbulent session that saw the market plunge nearly 2% before clawing back to end in positive territory, as investors weighed a rebound on Wall Street against continued volatility tied to the ongoing conflict between the United States and Iran.

The KOSPI ended the day at 6,579.48 points, up 16.76 points, or 0.26%, from the previous close. The index swung sharply throughout the session, falling to an intraday low of 6,439.49 before recovering and later climbing as high as 6,682.97, illustrating the scale of volatility that has gripped Korean markets this week. Total trading volume on the main board reached roughly 354 million shares, with turnover of approximately 18.9 trillion won.

Thursday's gain came a day after the KOSPI suffered its steepest single-day decline in months, tumbling nearly 4% Wednesday amid escalating tensions following fresh U.S. military strikes on Iran. The rebound Thursday was driven largely by a recovery on Wall Street overnight, which snapped a three-session losing streak after U.S. Treasury yields pulled back from recent highs.

The Dow Jones Industrial Average rose 0.56% overnight, while the S&P 500 gained 0.46% and the Nasdaq climbed 0.45%. The U.S. 10-year Treasury yield, which had surged as high as 4.821% during the prior session, later gave back those gains to close at 4.780%, down 1.9 basis points, helping ease some of the bond market anxiety that has weighed on global equities in recent days.

Weaker-than-expected U.S. private payroll data from ADP and comments from New York Federal Reserve President John Williams also helped calm fears of further aggressive interest rate hikes. Williams told CNBC that there was evidence inflation was moderating and that rising energy prices had not yet spread into broader service-sector pricing, comments that market participants interpreted as a signal the Fed may have more room to ease its tightening stance than previously feared.

Technology stocks led the overnight rebound on Wall Street, with Nvidia rising 3.21% and Micron Technology gaining 2.43%. SK Hynix's American depositary receipts also climbed 2.61%, providing a tailwind for the chipmaker's shares in Seoul trading. Broadcom, meanwhile, fell 0.82% in after-hours trading following its latest earnings report, which showed third-quarter fiscal 2026 revenue and earnings per share that topped market expectations, though the company's guidance for the coming quarter fell short of analyst forecasts. Even so, Broadcom's projection that AI chip revenue would double annually through 2028 helped bolster sentiment across the broader semiconductor sector.

Financial stocks were among the strongest performers on the KOSPI Thursday. KB Financial Group surged 5.2%, Shinhan Financial Group climbed 3.62%, and Hana Financial Group rose 3.41%, as banking and insurance shares led the index's recovery. By sector, insurance stocks gained 4.44%, construction shares rose 3.45%, electricity and gas producers advanced 3.22%, transportation equipment and parts climbed 2.69%, and machinery and equipment stocks added 2.5%.

Not all sectors participated in the rebound. Textile and apparel shares fell 1.56%, telecommunications stocks dropped 1.38%, medical and precision equipment makers declined 1.13%, and pharmaceutical shares slipped 0.96%.

Despite the headline index gain, foreign and institutional investors remained net sellers for a fifth consecutive trading session, a pattern that has persisted since Aug. 28. Foreign investors sold a net 207.7 billion won worth of shares Thursday, while individual investors offloaded a net 1.16 trillion won and institutions sold a net 241.9 billion won, according to exchange data. The continued selling from foreign and institutional investors limited the scale of the rebound even as individual retail investors and other corporate entities stepped in as net buyers earlier in the session.

Han Ji-young, a researcher at Kiwoom Securities, said the rebound reflected a combination of bargain-hunting after Wednesday's sharp selloff and easing pressure from U.S. bond yields.

"Amid bargain-hunting following yesterday's near-4% plunge, the easing of the surge in the U.S. 10-year Treasury yield and the effect of Broadcom's earnings surprise are likely to support a rebound," Han said.

However, other analysts cautioned that the market's underlying volatility remains elevated given ongoing geopolitical risks. Researchers Lim Jung-eun and Tae Yoon-seon of KB Securities warned that continued pressure from both supply-and-demand dynamics and elevated interest rates, combined with the potential for expanded market volatility stemming from geopolitical risk, warranted continued caution among investors.

"Given the persistent burden from recent supply-and-demand conditions and interest rates, close attention should be paid to the possibility of expanded stock market volatility driven by geopolitical risk," the KB Securities researchers said.

Oil prices continued climbing for a third consecutive session amid the ongoing U.S.-Iran conflict, adding a layer of concern for markets even as equities rebounded. Brent crude for November delivery rose 1.04%, while West Texas Intermediate crude for October delivery gained 0.88%, reflecting continued trader concern over potential disruptions to Middle East oil supply.

The tech-heavy KOSDAQ index moved in the opposite direction from the main board Thursday, falling 13.77 points, or 1.71%, to close at 790.21, as the smaller-cap index failed to overcome selling pressure from institutional and foreign investors despite opening higher earlier in the session.

Thursday's mixed performance across South Korea's two main exchanges, with the KOSPI recovering to a modest gain while the KOSDAQ extended its decline, underscored the uneven nature of the current market recovery. Analysts said the path forward for Korean equities would likely continue to hinge on developments in the Middle East conflict, the trajectory of U.S. Treasury yields, and upcoming economic data out of the United States that could further shape expectations for the Federal Reserve's policy path in the coming months.