Seoul Trading Halted Twice as Asian Tech Selloff Deepens

A volatile session in Asia on Tuesday saw a sharp selloff in technology and artificial intelligence stocks, with South Korea hit hardest. The KOSPI index fell by nearly 10% during trading, triggering the market’s circuit breaker twice in one day, a rare sign of severe stress in the market.

The slide followed recent losses on Wall Street, where big tech stocks have been under pressure as investors who had benefited from strong AI-related gains began taking profits. Nasdaq futures were down more than 2% before the US open, while S&P 500 futures fell about 1.2%. SpaceX also posted a third straight day of declines after a successful listing and steep early gains.

Markets are now focused on upcoming earnings from major chip companies, led by Micron and Cerebras Systems, which could indicate how strong AI demand remains. Sentiment is also being weighed down by the Federal Reserve, now led by Chairman Kevin Worsh, which signaled last week that it is not rushing to cut interest rates. Investors have scaled back expectations for large rate cuts and are awaiting this week’s PCE inflation reading, the Fed’s preferred gauge, which could reinforce fears of prolonged high rates.

There was some support for markets from US-Iran talks in Switzerland over the weekend, which showed early progress and eased concern about disruptions to oil flows through the Strait of Hormuz. The US also granted limited relief allowing some Iranian oil to be sold in global markets. Oil prices fell more than 3% in the previous session, with Brent near $78 a barrel, but investors remain skeptical the deal will hold. Analysts do not see the AI rally as over, saying much of the move reflects natural profit-taking after gains of hundreds of percent in some stocks, though high valuations, inflation, rates and geopolitics may keep volatility elevated.