Asian stock markets showed no clear trend Thursday as investors digested a divided Federal Reserve vote and growing volatility in South Korean shares. Japan’s Nikkei 225 gained almost one percent, managing to stay above 62,000 points. Meanwhile, South Korea’s KOSPI index slipped about one percent, deepening losses that erased a large chunk of gains since June.
The Fed’s Divided Vote Adds to Uncertainty
The Federal Reserve’s decision to keep interest rates unchanged at a 3.5% to 3.75% range came with notable dissent. Three regional Fed presidents wanted a hike instead, making it the most contested vote under Chair Kevin Warsh. The lack of clear direction from the Fed sent 30-year Treasury yields to their highest since 2007. US markets responded with the Dow suffering its worst session in more than a year, while Bitcoin and gold benefited from the uncertainty, climbing higher.
South Korean Market Reels as Chip Stocks Suffer
South Korea remains the epicenter of regional turmoil. The KOSPI plunged nearly 6% on Wednesday, prompting a circuit breaker twice in a row and forcing regulators to intervene by capping retail investment in single-stock leveraged ETFs to 20%. This move aims to stem amplified losses that have pushed the index down about 40% from its June peak. Volatility hit chipmakers hard with SK Hynix dropping up to 6% on Thursday, extending steep recent declines.
Samsung Electronics, however, bucked the trend with a record quarterly profit jump of more than 1,800% year over year, driven by soaring demand for AI memory chips. Despite this, investors remain cautious amid broader concerns about AI stock valuations. Oil prices added further complexity. Brent crude stayed under $90 a barrel after surging over 4% the previous day due to fresh Iranian attacks on US forces and drone strikes on Saudi facilities, offsetting earlier diplomatic easing near the Strait of Hormuz.
Gina Kim, portfolio manager at Nordea Asset Management, highlighted worries over retail margin balances in Korea and Taiwan, hinting at ongoing risks for regional investors.
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