South Korean KOSPI Plunges Over 5% After Fed Chair Nomination Announcement
Updated (3 articles)
Sharp Market Decline Triggers Five‑Percent KOSPI Slide The Korea Composite Stock Price Index closed at 4,949.67, down 274.69 points or 5.26 % on February 2, ending a four‑session rally and marking the day’s steepest fall [1][2]. The plunge followed the early‑session dip of 1.05 % to 5,169.36, underscoring rapid investor reaction to the U.S. news [2]. Traders cited heightened risk aversion linked to the Federal Reserve chair nomination as the primary catalyst [1][2].
Kevin Warsh Named Front‑Runner for Fed Chair by President Trump President Donald Trump announced former Fed governor Kevin Warsh as the leading candidate for the new chair, emphasizing his hawkish stance on interest rates [2]. The nomination sparked a sell‑off in both Korean and U.S. equity markets, with the S&P 500 slipping 0.43 % and the Nasdaq falling 0.94 % the previous Friday [2]. Market participants interpreted Warsh’s potential leadership as a signal of tighter monetary policy ahead [1][2].
Won Weakens and Precious Metals Collapse Amid Risk Aversion The Korean won depreciated to 1,449.5 per U.S. dollar, about 10 won weaker than the prior session, mirroring the broader sell‑off [2]. Gold prices plunged more than 10 % while silver tumbled roughly 30 %, ending the record‑setting rallies they had enjoyed earlier in the week [2]. Both currency and commodity declines reflected investors fleeing perceived safe‑haven assets after the Fed nomination news [1][2].
Blue‑Chip Stocks Slide, Defense Shares Rise, Microsoft Falters Samsung Electronics fell 1.5 %, SK hynix dropped 3.19 %, Hyundai Motor slipped 0.4 %, and Celltrion declined 0.24 % in the wake of the market shock [2]. Defense contractor Hanwha Aerospace bucked the trend, gaining 3.62 % as investors eyed potential procurement benefits [1][2]. In the United States, Microsoft shares tumbled after a cloud‑revenue miss, reviving concerns over AI‑related spending profitability [2].
Sources
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1.
Yonhap: South Korean Markets Plunge Over 5% as New Fed Chair Nomination Sparks Risk Aversion – Details the KOSPI’s 5.26 % closing drop, the Fed chair nomination’s impact, currency weakening, and sector moves, including Hanwha’s gain and broader market sentiment .
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2.
Yonhap: Seoul Stocks Tumble as Fed Chair Nomination Fuels Market Jitters – Focuses on the early‑session KOSPI slide, U.S. equity reactions, sharp gold and silver declines, Microsoft’s cloud miss, and specific blue‑chip performance, providing a granular view of the sell‑off .
Timeline
Dec 14, 2025 – KOSPI opens sharply lower, falling 2.09% to 4,080.01 as renewed worries about an AI‑related bubble hit Samsung Electronics (‑3.4%) and SK hynix (‑3.85%); the won trades at 1,477.4 per dollar, weakening 3.7 won from the prior session [3].
Dec 14, 2025 – U.S. equity markets tumble on a weak Broadcom margin outlook that fuels AI‑spending doubts, with the S&P 500 down over 1%, the Nasdaq slipping 1.7% and the Dow falling 0.5% [3].
Dec 14, 2025 – President Donald Trump signals that former Fed governor Kevin Warsh is his top candidate for the next Federal Reserve chair, noting Warsh “largely agrees” with his stance on further rate cuts; the current chair Jerome Powell’s term is set to end in May 2026 [3].
Dec 14, 2025 – Seoul’s large‑cap stocks retreat across the board, with Samsung, SK hynix, Hanwha Aerospace, KB Financial and Naver all posting declines, underscoring broad market weakness amid AI concerns [3].
Feb 2, 2026 – The KOSPI slides 1.05% in the opening minutes to 5,169.36 after President Trump announces Kevin Warsh as the front‑runner for the Fed chair, prompting risk‑averse trading in South Korea [2].
Feb 2, 2026 – U.S. equity indices close lower on Friday, with the S&P 500 down 0.43% and the Nasdaq off 0.94% as investors assess the impact of the hawkish Warsh nomination [2].
Feb 2, 2026 – Gold plunges more than 10% and silver tumbles about 30%, ending their record‑setting rallies and adding to global market stress [2].
Feb 2, 2026 – Microsoft shares tumble after the company reports weaker‑than‑expected cloud revenue, reviving concerns about the profitability of ongoing AI spending [2].
Feb 2, 2026 – Major Korean blue‑chip stocks mostly decline: Samsung Electronics (‑1.5%), SK hynix (‑3.19%), Hyundai Motor (‑0.4%) and Celltrion (‑0.24%); Hanwha Aerospace is the sole gainer, up 3.62% [2].
Feb 2, 2026 – The Korean won weakens to 1,449.5 per U.S. dollar, a depreciation of 10 won from the previous session, mirroring the broader sell‑off [2].
Feb 2, 2026 – South Korean markets plunge over 5%, with the KOSPI dropping 274.69 points (‑5.26%) to close at 4,949.67, ending a four‑session winning streak as the Fed chair nomination and a sharp fall in precious metals spark risk aversion [1].
Feb 2, 2026 – Prime Minister Kim Min‑seok says South Korea and the United States are making headway on tariff‑related issues, crediting a direct phone line he set up with U.S. Vice President JD Vance last month, after Trump threatened to raise South Korean tariffs from 15% to 25% [1].
Feb 2, 2026 – “Golden,” the track from the Netflix series KPop Demon Hunters, wins the first Grammy ever awarded to a K‑pop song, highlighting the genre’s expanding global influence [1].
Feb 2, 2026 – Former first lady Kim Keon Hee files an appeal against a 20‑month prison sentence for accepting luxury gifts from the Unification Church, marking the first criminal conviction of a former South Korean presidential couple [1].
Feb 2, 2026 – Canada’s defense procurement minister Stephen Fuhr inspects Hanwha Ocean’s Geoje shipyard to evaluate its submarine‑building capability, a visit that could sway the final selection for the Canadian Patrol Submarine Project, for which Hanwha Ocean and Thyssenkrupp Marine Systems were shortlisted last summer [1].