KOSPI Plummets Below 6,400 Points Amid Interest Rate Hike Fears

The KOSPI stock market index in South Korea unexpectedly plummeted to its lowest point this year, falling below 6,400 points due to concerns over a potential U.S. interest rate hike and geopolitical instability.

The index had been expected to reach the 7,000-point level again, but the rapid change in sentiment was sparked by several negative factors, including the possibility of a key interest rate hike in September, rising oil prices, and supply and demand instability.

According to the Korea Exchange, the KOSPI closed at 6,579.48 on September 4th, up only 16.76 points (0.26%) from the previous day's close, but with significant volatility throughout the day.

The sudden drop was attributed to several key factors, including the U.S. Federal Reserve Chairman Kevin Warsh's emphasis on vigilance over prices at a recent meeting, which increased the probability of a rate hike this month from 35% to 57%, according to Fedwatch.

Additionally, rising oil prices due to renewed military conflicts between the U.S. and Iran added to the market's concerns, as higher oil prices not only increase companies' cost burdens but also serve as a justification for further rate hikes by the Fed.