Wall Street's three major indexes closed lower overnight but pared earlier losses, with the Dow Jones falling 0.44 percent and the S&P 500 and Nasdaq declining 0.27 percent and 0.28 percent, respectively.
Markets initially came under pressure from a surge in oil prices triggered by retaliatory attacks on energy facilities in the Middle East, compounded by expectations that the Federal Reserve will keep interest rates higher for longer. Losses narrowed toward the day's trading close as U.S. officials signaled restraint on further escalation and made remarks aimed at stabilizing oil markets, prompting bargain hunting.
The Fed's chair Jerome Powell reinforced a hawkish stance, indicating that rate cuts are unlikely unless inflation shows a clear and sustained decline, and saying that further rate hikes were discussed at the latest meeting.
Oil prices remained a key overhang, with Brent crude surging more than 10 percent intraday and briefly nearing $120 per barrel after Iran's attack on an energy complex in Qatar heightened supply concerns. The spike fueled inflation fears and pushed U.S. Treasury yields higher, with the 2-year yield touching 3.96 percent before closing at 3.79 percent, up 5 basis points.
But sentiment improved later in the session after Israeli Prime Minister Benjamin Netanyahu said Iran had lost the capability to enrich uranium or produce missiles, signaling that military objectives may have largely been achieved. His remarks, along with indications that further strikes on energy infrastructure would be avoided, helped limit losses.
Sector-wise, mega-cap tech stocks broadly declined, with Tesla dropping 3.18 percent. In contrast, artificial intelligence (AI) and semiconductor-related shares showed resilience, lifting the Philadelphia Semiconductor Index by 0.87 percent. The CBOE Volatility Index (VIX) fell 4.11 percent to 24.06, reflecting reduced immediate market stress despite ongoing uncertainty.
In Asia, investor focus is shifting toward corporate earnings, particularly in semiconductors. Cautious guidance from Micron despite strong earnings has raised concerns over a potential peak in the memory cycle, which may weigh on regional chipmakers such as Samsung Electronics and SK Hynix in the near term. As of Friday morning, Samsung Electronics was unchanged at 200,500 won, while SK hynix rose 0.49 percent to 1,018,000 won.
Investors are likely to remain sensitive to oil prices, as prolonged energy inflation could complicate the Fed's policy path to rate cuts and sustain volatility across global markets.
Foreign investors have been net sellers on the KOSPI this year, offloading over 36 trillion won worth of shares. Some analysts, however, believe the sell-off may be nearing its end, pointing to improving earnings momentum, particularly in semiconductor sectors.
Geopolitical risks from the Middle East and a sharply weaker won have been cited as key drivers of foreign outflows. Surging oil prices and a stronger U.S. dollar pushed the won past the 1,500 level against the greenback, further accelerating selling and market volatility.
Pressure eased slightly as the won strengthened to 1,492.30 per dollar from a previous close of 1,501.3.
As of 11:04 a.m., the KOSPI rose 0.48 percent to 5,790.78 points, and the junior KOSDAQ gained 1.60 percent to 1,161.80.
But stocks traded mixed, with biopharmaceuticals, financials and energy shares leading gains while automakers and defense-related stocks lagged.
In the energy and battery sector, LG Energy Solution gained 0.94 percent to 374,500 won and Doosan Enerbility advanced 2.45 percent to 108,900 won. Biopharmaceutical stocks showed strength, with Samsung Biologics climbing 2.27 percent to 1,621,000 won and Celltrion adding 0.50 percent to 203,000 won.
Hyundai Motor was unchanged at 522,000 won, Kia edged down 0.12 percent to 170,300 won, and Hyundai Mobis fell 1.57 percent to 406,500 won.
Defense and shipbuilding stocks were mixed, with Hanwha Aerospace dropping 3.78 percent to 1,323,000 won and HD Hyundai Heavy Industries slipping 0.53 percent to 564,000 won, while Hanwha Ocean rose 0.46 percent to 130,600 won.
In the financial sector, KB Financial Group gained 0.64 percent to 156,700 won, Shinhan Financial Group rose 1.35 percent to 97,800 won, and Mirae Asset Securities jumped 3.90 percent to 69,300 won, though Samsung Life Insurance fell 2.60 percent to 224,500 won.
Elsewhere in Asia, Japan's Nikkei 225 fell 3.38 percent to 53,372.53 amid geopolitical uncertainty, as U.S. President Donald Trump urged Japan to take a more active military role including support in the Strait of Hormuz during a summit with Japanese Prime Minister Sanae Takaichi in Washington, D.C. But she said that there are actions Japan can and cannot take "within the limits of Japanese law."
Hong Kong's Hang Seng Index declined 0.59 percent to 25,349.29, China's Shanghai Composite slipped 0.17 percent to 3,999.54 and Taiwan's Taiex Index edged down 0.10 percent to 33,655.23.
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