The benchmark KOSPI fell 2.47 percent to 7,330.44 about an hour into trading, while the junior KOSDAQ dropped 1.69 percent to 1,092.34. The South Korean won was largely unchanged at 1,500.10 per dollar, from 1,500.30 in the prior session.
Technology heavyweights led the decline, with Samsung Electronics falling 2.49 percent to 274,000 won and SK hynix slipping 1.85 percent to 1.81 million won.
Automakers and industrial shares also weakened sharply. Hyundai Motor plunged 6.64 percent to 619,000 won, Kia fell 3.75 percent to 156,400 won and Samsung C&T dropped 5.76 percent to 376,500 won. Samsung Electro-Mechanics declined 3.78 percent and Doosan Enerbility fell 3.21 percent.
Defense and financial shares, however, outperformed the broader market. Hanwha Aerospace surged 7.74 percent to 1,322,000 won, HD Hyundai Heavy Industries rose 0.81 percent and Samsung Life Insurance gained 1.44 percent. KB Financial Group edged up 0.46 percent.
The losses followed a volatile overnight session on Wall Street, where early gains faded and stocks finished mixed as geopolitical uncertainty and weakness in semiconductor shares weighed on investor sentiment.
Stocks initially rose on indications that the U.S. could temporarily ease sanctions on Iranian oil exports and extend exemptions for Russian crude, raising hopes of improved global energy supply and lower oil prices.
However, sentiment later reversed after the White House dismissed Iran's latest ceasefire proposal as largely symbolic and lacking meaningful concessions, while U.S. President Donald Trump delayed a planned military strike on Iran but warned that military action could still come at any time, reviving concerns over prolonged tensions in the Middle East.
Semiconductor stocks came under additional pressure after Seagate Technology’s chief executive warned about capacity constraints in the memory-chip industry and the risk of overinvestment across the sector, fueling renewed concerns that the chip cycle may be nearing a peak.
The Philadelphia Semiconductor Index fell 2.47 percent, with Micron plunging 5.95 percent and Nvidia and Sandisk also ending sharply lower. The Dow Jones Industrial Average rose 0.32 percent, while the S&P 500 and Nasdaq Composite fell 0.07 percent and 0.51 percent, respectively.
Oil prices remained elevated amid persistent supply concerns. West Texas Intermediate crude traded above $106 a barrel, while Brent crude hovered near $109. The U.S. dollar index stayed in the upper 98 range.
U.S. Treasury yields fluctuated during the session before ending lower, though they remained elevated as investors reassessed the outlook for inflation and interest rates. The two-year Treasury yield stood at 4.05 percent, while the benchmark 10-year yield traded at 4.58 percent. The 30-year yield remained above 5 percent at 5.13 percent.
Elsewhere in Asia, Japan's Nikkei 225 fell 0.21 percent to 60,689.71, while Hong Kong's Hang Seng Index rose 0.53 percent to 25,811.11 and China's Shanghai Composite Index gained 0.13 percent to 4,136.76.
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