South Korean equities experienced sharp swings during the first week of September, as U.S.-Iran military conflict, concerns about U.S. interest rates and renewed COVID-19 fears drove divergent moves across sectors. The KOSPI rose 0.46% on August 31 and 0.23% on September 1 before plunging 3.99% on September 2, then rebounded 1.64% on September 4 to close at 6,687.21. The September 2 selloff followed U.S. airstrikes on Iran on August 31 and September 1 and Iran's retaliation. U.S. Vice President JD Vance said on September 3 that the U.S. was not talking to Iran until it stopped attacking commercial shipping, indicating that tensions would persist for the time being. Sentiment improved after Federal Reserve Governor Christopher Waller said disinflation was emerging and that he would lean toward keeping rates unchanged if the trend continued. However, stronger U.S. employment data lifted the probability of a September rate hike to 60.4% from 49.4% a day earlier, according to the CME FedWatch Tool. Retail and foreign investors were net sellers in the KOSPI during the week, while other corporate entities purchased 6.4489 trillion won. Semiconductor shares fluctuated, but pharmaceuticals, biotechnology, vaccines, diagnostics and hair loss treatments attracted stronger attention. Hyundai Pharm and JW Shin Yak both reached their daily limit up on September 1 after Wall Street increasingly identified hair loss treatments as a potential global investment theme following obesity drugs. Robotis and SPG also advanced on expectations for South Korean robotics suppliers in China and North America. The won strengthened to 1,350.4 per dollar, while South Korean government and corporate bond yields rose sharply. Analysts said Middle East oil-price uncertainty and potential yen carry trade unwinding were restricting global risk appetite, with WTI crude futures for October delivery trading above $91 per barrel.