The U.S. stock market experienced a significant drop of around 2% due to escalating geopolitical risks in the Middle East and weakness in artificial intelligence (AI) semiconductor stocks, leading to expectations of continued volatility in the domestic market. Analysts suggest that the upcoming simultaneous expiration of futures and options, along with potential global capital movements ahead of SpaceX's IPO, could further increase market fluctuations.
On June 10, the New York Stock Exchange reflected heightened geopolitical tensions, with all major indices closing lower. The Dow Jones Industrial Average fell 1.87% to close at 49,918.78, while the S&P 500 dropped 1.62% to 7,266.99, and the Nasdaq Composite declined 1.98% to finish at 25,169.50. The Volatility Index (VIX) surged 11.83% to 22.22, indicating a deterioration in investor sentiment.
While the Consumer Price Index (CPI) for May met expectations, alleviating some inflation concerns, the renewed military tensions between the U.S. and Iran had a more significant impact on market sentiment.
The U.S. CPI for May rose 4.2% year-over-year and 0.5% month-over-month, aligning with market forecasts. In contrast, the core CPI increased by 2.9% year-over-year and 0.2% month-over-month, falling short of expectations. Analysts noted that surging energy prices contributed to the headline inflation but have not yet led to widespread secondary price increases.
Investor focus has shifted from inflation to the situation in the Middle East. President Donald Trump mentioned the possibility of further attacks on Iran, which has threatened a strong response, increasing geopolitical uncertainty. Reports of additional U.S. strikes after the market closed could also weigh on Asian markets.
Major tech stocks related to AI also saw declines, with Nvidia down 3.27%, Broadcom falling 4.63%, AMD decreasing 4.57%, and Micron dropping 3.53%. Concerns over overvaluation in the AI sector and profit-taking ahead of significant IPOs contributed to the negative sentiment.
In the domestic pre-market, large semiconductor stocks showed weakness as well. Between 8:00 and 8:50 a.m., Samsung Electronics and SK Hynix both fell over 4%, settling at around 280,000 won and 1,950,000 won, respectively.
Han Ji-young, a researcher at Kiwoom Securities, stated, "Today, the domestic market is expected to open lower due to uncertainties from news of U.S. airstrikes on Iran, AI investment concerns from SoftBank, and the simultaneous expiration of futures and options."
However, he added, "The issues related to OpenAI stem from problems in evaluating collateral value for private companies, not from a slowdown in AI demand. This could provide some support for domestic semiconductor and AI-related stocks."
Another variable in the market today is supply and demand. The simultaneous expiration of futures and options could amplify index volatility, and the potential movement of funds by global institutional investors ahead of SpaceX's IPO is also a point of interest for the market.
One analyst noted, "The sharp volatility seen since June is more a technical adjustment resulting from ETF supply and demand disruptions and the aftermath of an overheated market, rather than a sign of fundamental deterioration. Unless there are clear signals of fundamental damage, it is essential to monitor changes in supply and demand and upcoming events rather than succumb to excessive pessimism."
* This article has been translated by AI.
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