Seoul's KOSPI Tumbles More Than 7% as Inflation Data and AI Worries Bite

The Korea Composite Stock Price Index (KOSPI) fell sharply as trading got under way on Thursday, following hotter US inflation data and deepening doubts about artificial intelligence. By 10:13 a.m. in Seoul, the benchmark was down 7.28% at 5,571.27.

The decline stretched the KOSPI's losing run to six sessions and left the benchmark roughly 40% below its June 19 peak. Still, the index was up 31.87% for 2026, according to TradingView data.

Why Did the KOSPI Trigger a Trading Halt?

Labor Department data put US inflation at 3.7% in September as measured by the Consumer Price Index (CPI), against economists' 3.6% forecast. Core inflation, stripping out food and energy, also beat forecasts with a 2.6% reading.

BREAKING: South Korea’s KOSPI falls another -7% as tech stocks drop sharply.

The KOSPI is now down -40% from its record high seen on June 19th. pic.twitter.com/FOIhJjVza4

— The Kobeissi Letter (@KobeissiLetter) October 15, 2026

On Wednesday, US stocks had already retreated, with the S&P 500 losing 1.11% and the Nasdaq Composite dropping 1.88% as inflation worries and AI skepticism weighed.

Korea JoongAng Daily said the KOSPI opened 5.59% lower at 5,673.01, which triggered a program trading pause at 9:08 a.m. The sidecar mechanism blocks automated sell orders from program trading for five minutes, and is activated when KOSPI 200 futures fall 5% and hold there for a minute.

Samsung Electronics was down 6.03% and SK Hynix had dropped 7.61% not long after the market opened. Foreign investors also sold a net 285.6 billion won in the first part of the session.

A memory-chip advance by China's ChangXin Memory Technologies had already put pressure on both chipmakers.

Will Seoul Stabilize Before the Fed Meeting?

The report reignited worries that the Federal Reserve could raise rates again at its October 27 and 28 meeting. The Fed had already lifted borrowing costs in September.

Higher rates would raise borrowing costs for companies using debt to fund AI data centers. NVIDIA gave up more than 3% on Wednesday.

Brent crude, meanwhile, remained around $106 a barrel with Middle East tensions ongoing.

A broader slide in Asian equities earlier this week had already dampened global risk appetite.

Thursday's selloff demonstrates how a single inflation surprise can flow from Fed expectations to AI financing costs and through to Korean chipmakers. The Fed's October 28 decision will indicate whether those pressures ease.