Saturday, July 18, 2026

Today’s Key Insight

Escalating military conflict in the Middle East, marked by consecutive US strikes on Iran near the Strait of Hormuz, has triggered a pronounced risk-off wave across global markets. This geopolitical friction is driving a sharp surge in crude oil prices and market volatility, compounding pressure on a US tech sector already suffering from a semiconductor correction. Simultaneously, trade tensions are simmering as Donald Trump threatens Canada with tariffs over wildfire smoke, adding another layer of policy uncertainty for international investors.

Market Overview

Korea. The South Korean stock market was closed for Constitution Day, meaning the latest available data remains from July 16, when the KOSPI and KOSDAQ fell sharply by 6.37% and 4.53% respectively. Looking ahead, domestic market sentiment appears constrained by monetary policy concerns, as analysts increasingly expect the Bank of Korea to raise interest rates in August, potentially pushing the terminal rate to a range of 3.25% to 3.50%.

US. On July 17, US equities closed lower with the Nasdaq leading the decline by falling 1.40%, as AI and semiconductor stocks continued their slide, reportedly entering a technical bear market down 20% from their peak. The heightened geopolitical anxiety was clearly reflected in risk indicators on July 17, with the VIX volatility index surging 12.19% to 18.77 and WTI crude oil jumping 4.48% to settle at $82.49 per barrel.

Cross-Market Signals

• Geopolitical Escalation and Energy Supply Risk: US military actions near the Strait of Hormuz have directly fueled a 4.48% surge in WTI crude oil, raising input cost concerns that could complicate the global inflation outlook.
• Flight to Defensive Assets: The simultaneous 12.19% spike in the VIX and a 0.68% rise in gold prices on July 17 suggest that investors are actively hedging against further military and trade escalations.
• Tech Sector De-risking Amid Macro Pressures: The Nasdaq’s 1.40% drop on July 17 indicates that geopolitical fears are accelerating the rotation out of highly valued semiconductor and AI stocks, which are highly sensitive to global supply chain disruptions.