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Kospi slides 3% on escalating Iran crisis, Fed hawkishness as won hits 17-year low

Published: 19 Mar. 2026, 17:28 Updated: 19 Mar. 2026, 19:31

The dollar-won exchange rate is shown on a digital screen inside Hana Bank in Jung District, central Seoul, on March 19. [YONHAP]

Korean shares ended almost 3 percent lower Thursday as concerns over inflation brewed after attacks on the Middle East's critical energy facilities and hawkish comments by the U.S. Federal Reserve chief following a rate freeze decision. The local currency slid against the U.S. dollar to the lowest level in 17 years.

The benchmark Kospi plummeted 161.81 points, or 2.73 percent, to close at 5,763.22, ending a three-day rally.

Trade volume was heavy at 1.17 billion shares worth 22.6 trillion won ($15 billion), with losers outnumbering winners 678 to 204. Foreigners and institutions dumped local shares worth 1.87 trillion won and 666 billion won, respectively, while retail investors chipped in 2.4 trillion won.

Overnight, the Dow Jones Industrial Average dipped 1.63 percent, while the tech-heavy Nasdaq Composite slid 1.46 percent, and the S&P 500 pulled back 1.36 percent.

Experts said investors' risk appetite was sapped as Israel attacked Iran's largest South Pars gas field, and Iran hit back with a strike on a major liquefied natural gas site in Qatar, pushing up global oil prices again.

Following the attacks, the Brent crude price, the international oil benchmark, rose to around the $110-per-barrel level, while the price of U.S. benchmark West Texas Intermediate neared $100 per barrel.

Fed Chair Jerome Powell's remarks after the Federal Open Market Committee's decision to maintain its policy rate in the 3.5 to 3.75 percent range also dragged down market sentiment.

At a press conference, Powell said the surge in oil prices has increased inflationary pressures, signaling a cautious stance on the timing of further rate cuts. On top of that, the latest U.S. Producer Price Index (PPI) showed that producer prices in the world's largest economy increased by the most in seven months in February, raising further concerns over inflation.

The dollar-won exchange rate is shown on a digital screen inside Hana Bank in Jung District, central Seoul, on March 19. [YONHAP]

"Risk-off sentiment expanded with the hotter-than-expected February PPI and Powell's remarks on inflation concerns," Lee Kyoung-min, an analyst at Daishin Securities, said.

Attacks on critical Middle Eastern energy infrastructure also fueled such woes, he added.

In Seoul, market top-cap Samsung Electronics slid 3.84 percent to 200,500 won, and its chipmaking rival SK hynix tumbled 4.07 percent to 1.01 million won. Auto giant Hyundai Motor shed 4.22 percent to 522,000 won, and its sister Kia went down 2.63 percent to 170,500 won. AI investment firm SK Square dipped 3.02 percent to 611,000 won, and leading battery maker LG Energy Solution slipped 3.26 percent to 371,000 won.

Major shipbuilders also lost ground, with HD Hyundai Heavy dropping 3.9 percent to 567,000 won, and Hanwha Ocean contracting 2.18 percent to 130,000 won. Bio giant Samsung Biologics pulled back 2.52 percent to 1.59 million won, and Celltrion tumbled 3.58 percent to 202,000 won.

Financial shares were among the few gainers, with KB Financial rising 0.65 percent to 155,700 won and Shinhan Financial adding 1.58 percent to 96,500 won. Samsung Electro-Mechanics jumped 3.34 percent to 479,500 won.

The won was quoted at 1,501 won against the dollar at 3:30 p.m., waning by 17.9 won from the previous session to mark the weakest level since March 10, 2009, when the won hit 1,511.1 during the global financial crisis.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 6.8 basis points to 3.329 percent, and the return on the benchmark five-year government bonds gained 7.6 basis points to 3.587 percent.

Yonhap