"Doomsday" Suddenly Hits Asian Markets, Korea and Taiwan Hit Hard
Global stock markets recorded a very significant contraction at the start of this week. Massive selling that occurred on the US exchanges at the close of last weekend quickly spread to Asian markets during today’s trading, Monday (8/6/2026).
This extreme weakness was driven by a combination of US macroeconomic data releases, which fundamentally altered interest rate expectations, and escalating geopolitical tensions occurring simultaneously in the Middle East and the waters surrounding the Taiwan Strait.
Heavy Pressure on Wall Street and the Semiconductor Sector
At the close of trading last Friday (5/6/2026), the three main indices on Wall Street faced severe pressure. The centre of the selling action was the technology and semiconductor sectors, which led the overall market decline. The DJIA closed down -1.35%, the S&P 500 corrected by -2.64%, and the Nasdaq Composite recorded its deepest decline, reaching -4.18%. This sharp drop in the Nasdaq also marked its worst daily decline since April 2025.
This selling in the US exchanges was directly triggered by the release of the May employment report, which showed the addition of 172,000 new jobs. This figure was far above market analyst consensus expectations. The release of such strong fundamental data immediately faded market participants’ expectations regarding the possibility of interest rate cuts by the Federal Reserve in the near future. The consequence of the projected persistently tight monetary policy triggered large-scale profit-taking in chip stocks, whose valuations were already considered very high and vulnerable to price adjustments.
Extreme Fall in Asian Markets
The sharp decline on Wall Street provided a shockwave felt immediately by Asian stock exchanges at the start of today’s trading. Selling pressure dominated, particularly in countries where index structures are heavily dependent on the semiconductor industry and the global supply chain technology.
The TAIEX index in Taiwan was seen plunging, briefly touching the 42,376 level during today’s trading session, recording a sharp decline of up to -6%. Even more extreme pressure hit the South Korean stock market. The KOSPI index plummeted severely, nearly breaching its psychological low to the level of 7,442.73, with a daily decline reaching -8.79%.
In addition to being fundamentally burdened by negative sentiment from the fall of global technology stocks due to US central bank policy, Asian markets also had to respond to the sudden heating of regional geopolitics. Foreign investor uncertainty increased sharply following the launch of a special maritime law enforcement operation by the Chinese military in the waters east of Taiwan. This military and logistical manoeuvre triggered serious concerns regarding territorial security stability and the potential for disruptions to international trade flows in the East Asian region.
IHSG Position as a Comparison and the Impact of Middle East Conflict
As a comparison of regional market performance, the Jakarta Composite Index (IHSG) in the domestic capital market also joined the deep global downward trend. At the opening of trading today, the IHSG opened sharply lower, briefly touching the 5,346.34 level with a correction of -4.43%.
It should be noted that the structure of the IHSG decline was driven by different primary catalysts compared to the fall of stock exchanges in the East Asian region. Given that the composition of major issuers within the IHSG does not have a dominant market capitalisation weight in the technology or semiconductor manufacturing sectors, today’s domestic index correction is not fundamentally linked to the Nasdaq index decline in the US exchanges. The sharp decline in the Jakarta stock exchange was more dominantly influenced by investor panic sentiment regarding the escalation of open warfare between Iran and Israel. A series of missile attacks has re-triggered widespread market fears regarding the potential blockade and operational disruption of vital logistics routes in the Strait of Hormuz. This condition is feared to trigger commodity supply shortages, which could ultimately risk driving up crude oil prices and triggering a surge in global energy inflation. This chain of negative sentiment is the primary reason for the mass selling of various investment instruments in the Indonesian capital market.