Kospi rattled by Iran-Kuwait escalation headlines, foreign and pension buying drives rebound as chip news stays upbeat

The Kospi opened higher but reversed to fall as much as 2% after breaking news that Iran's Revolutionary Guard had struck U.S. military bases in Kuwait and Bahrain. The index briefly broke below the 7,100 level, with some noting valuations had fallen to levels last seen around the global financial crisis. Concerns deepened further after U.S. Central Command confirmed strikes on roughly 90 Iranian military sites.

Buying from foreign investors and pension funds in the afternoon helped the index recover. The Kospi closed up about 0.4% at 7,278 points and the Kosdaq rose about 1.3% to 795 points, while the won traded around 1,506 per dollar. Foreigners bought roughly 110 billion won of Kospi shares and 8 billion won of Kosdaq shares, extending three straight sessions of net futures buying.

Leveraged and inverse ETFs continued to dominate the top of the trading-value rankings, raising concerns that the market is being distorted. Commentators noted that genuine positive news is failing to be reflected as fear sentiment gets amplified, with retail investors piling into inverse and leveraged products contributing to daily swings of around 10% in either direction.

On July 8 (local time), the Dow Jones Industrial Average closed lower on Wall Street as geopolitical tensions over Iran reignited. The index, which had been rallying, took a breather.

The Nasdaq Composite traded near flat for most of the late session before staging a last-minute rebound to close up about 0.2%. A semiconductor sector that had been declining steadily turned sharply positive, driving much of the gain.

The Philadelphia Semiconductor Index rebounded after two straight sessions of pullback following the prior day's sharp drop, holding its support level. Micron Technology rose about 1%, SanDisk jumped nearly 7%, and Nvidia gained close to 4%, while equipment makers Arista Networks and Dell Technologies also advanced.

The S&P 500 slipped roughly 0.3% to 1%, with nine of eleven sectors declining, but resilient tech shares and an energy sector boosted by the oil spike limited the losses. The Russell 2000 fell 0.9%.