A dramatic sell-off in technology companies led South Korea’s stock market to halt trading for 20 minutes on Monday, as the Kospi index fell nearly 9% within minutes of opening. The pause is part of a circuit breaker mechanism designed to avoid panic trading, and it was activated for the third time this year following the drop in tech stocks.
The Kospi index closed down 8.3%, while Japan’s Nikkei market sank 3.8%. Oil prices increased on Monday, raising inflation concerns, after Iran and Israel exchanged strikes for the first time since the countries agreed to a ceasefire with the US in April.
European stock markets opened slightly down, with Germany’s Dax dropping 0.7% and the UK’s FTSE 100 falling 0.4%. Traders are cautiously watching a “messy mix” of market shocks, primarily related to the tech sector and exacerbated by rising energy prices, according to Saxo’s chief investment strategist Charu Chanana.
Tech equities have surged in recent weeks, but investors are “repositioning” due to concerns that investments in artificial intelligence may be overvalued, she added. Markets like the Kospi and Nikkei are especially vulnerable to such shocks since their exchanges are dominated by technology stocks.
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