Strait of Hormuz conflict causes fluctuations in South Korea's composite stock index and international oil prices

Amid ongoing U.S.-Iran conflicts over the Strait of Hormuz, the international markets have been thrown into chaos, and the Korean KOSPI index has also failed to escape the downward trend. This conflict is currently affecting oil supply and demand, with rising oil prices putting pressure on prices and the overall economy.

On the 4th, Korean time, following a sharp decline the previous day, the KOSPI index faced additional downward pressure. The day before, the KOSPI plunged over 7%, breaking below the 5,800-point mark. This was the largest drop since concerns over interest rate hikes peaked in the second half of 2024. Iran’s blockade of the Strait of Hormuz pushed up oil prices, heightening inflation worries.

International oil prices surged rapidly, intensifying fears of a slowdown in global economic growth. Brent crude rose to $81.4 per barrel, and U.S. West Texas Intermediate also saw similar increases. As a result, the U.S. stock market was not spared from declines. Major indices like the Dow Jones and Nasdaq closed lower.

Meanwhile, the Korean won against the dollar temporarily soared above 1,500 won, prompting global investors to withdraw funds from the won and shift to safe-haven assets. This was the first time since the global financial crisis, driven by a strong dollar and rising government bond yields, which had a significant impact on the Nasdaq market.

In this situation, due to expectations of an early end to the war, intraday declines narrowed. Experts believe that the Korean domestic market may also see buying on dips. However, given the ongoing market instability, whether this positive momentum can continue remains uncertain. Future market trends are expected to depend on global developments and economic policy changes.