South Korea’s KOSPI tripped circuit breakers in early Monday local trading and is down roughly 7.25% as of 10:45 p.m. ET, an abrupt break in what had been the top-performing major market in the world this year. The question now: does the contagion hit the Nasdaq when New York opens?
What’s Happening in Overnight Trading
The setup is brutal. The KOSPI is still up roughly 75% year-to-date but has shed about 15% since last Tuesday, and the index is dominated by memory-chip giants Samsung and SK Hynix. The iShares MSCI South Korea ETF (NYSEARCA:EWY), the cleanest US-listed proxy, already tumbled 7.7% Friday after Broadcom issued a lower-than-expected AI semiconductor revenue forecast, and is down 14.89% over the past week.
US futures are mixed and unsettled. Nasdaq futures sit up about 0.16% as of 9:45 p.m. ET, while S&P 500 and Dow futures are red, with reports that Iran fired missiles at Israel compounding the pressure. In a Financial Times interview Sunday night, President Trump said of Israeli PM Benjamin Netanyahu: “I call the shots. I call the shots. He doesn’t call the shots,” and said Israel would have to accept a ceasefire. Geopolitical uncertainty is compounding the uncertainty that built on Friday after Treasury yields spiked.
Stocks to Watch Tomorrow
The contagion pathway runs straight through the Invesco QQQ Trust (NASDAQ:QQQ). Top holdings NVDA (9.74%), MSFT (8.63%), AAPL (7.95%) and AVGO (5.57%) all depend on Korean memory supply. NVIDIA (Nasdaq: NVDA) CEO Jensen Huang is currently in South Korea and signed a major deal with SK Hynix over the weekend. He hasn’t been outwardly bothered by the sell-off. He said today, “Everybody should be very excited, they can now buy stock at a cheaper price.”
Overnight Futures
U.S. futures are holding in overnight. As of midnight, the Nasdaq is up about .66% while S&P 5000 futures are up .22%. On platforms with 24-hour trading, NVIDIA is up 1.2% overnight while Micron is up 4%. Expect volatility before U.S. markets open tomorrow, but it should be noted the KOSPI continues to rebound. Shares of the Nikkei 225 are down 3.78% headed into the afternoon session.
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