KOSPI plunges 8.3%, rebounds 8.2% after U.S. jobs surprise

South Korea’s KOSPI dropped 8.29% on June 8 to 7,484.41, prompting an automatic 20-minute trading halt, then climbed 8.18% on June 9 to 8,096.93. The two-day move totaled almost 17%.

The sell-off followed a stronger-than-expected U.S. jobs report showing 172,000 jobs added in May versus forecasts near 85,000. The data reduced expectations for imminent Federal Reserve rate cuts, which put pressure on highly valued growth stocks.

Chipmaker Broadcom warned of weaker-than-expected AI-related sales and fell about 13% on Friday. That decline pushed U.S. chip benchmarks lower ahead of Seoul’s Monday open. When trading began, Samsung Electronics and SK Hynix were each down roughly 10%.

Market concentration amplified the impact. The KOSPI tracks around 950 companies but gains this year were heavily concentrated: Samsung and SK Hynix accounted for about 72% of the index’s gains in 2026. The index had risen roughly 92% year-to-date on demand for AI hardware and higher chip prices.

At its peak in early June the Korean market’s total value exceeded 7,000 trillion won, about $4.6 trillion. Monday’s drop erased more than 554 trillion won, roughly $360 billion, in market value in a single day.

Leveraged retail positions and record margin debt intensified the decline. Margin borrowing in Korea reached 37.74 trillion won, about $25 billion. Forced margin calls led brokers to liquidate holdings, accelerating price falls and pushing the market’s volatility gauge above levels seen during the global financial crisis.

The selling extended beyond Seoul. The Nasdaq fell more than 4% intraday on Tuesday before recovering to close down about 1%. Bitcoin slid to about $59,100, producing more than $1.7 billion in losses on leveraged crypto positions.

Conditions that eased selling included a de-escalation in Middle East tensions, stabilization in U.S. chip shares overnight and comments from Nvidia CEO Jensen Huang, who described the sell-off as “a buying opportunity.” Those factors helped the KOSPI recover most of Monday’s losses by Tuesday.

Analysts point to links among AI investment, inflation and central bank policy. Global AI spending is estimated near $800 billion in 2026 and has pushed up demand for power, chips and labor. Higher demand for AI hardware can affect inflation and influence central bank decisions on interest rates.

Investors are watching the Federal Reserve meeting on June 16–17, the first under chair Kevin Warsh, and the upcoming U.S. inflation report for indications of whether recent volatility will persist in markets concentrated in AI hardware and other rate-sensitive sectors.