Investors in South Korea seem jittery since the stock markets have been on a dizzying roller-coaster ride in recent sessions, triggered by fears that the US economy has been slowing faster than expected.

The benchmark Kospi rebounded sharply Tuesday, along with the markets in Japan and Taiwan, allowing investors and financial authorities to heave a sigh of relief. But it is too early to conclude that a phase of steep losses on recession worries is over, especially given the depth of shock that gripped the Korean stock market and elsewhere in Asia a day earlier.

The main bourse Kospi plunged 8.8 percent Monday, marking the biggest fall since October 2008. At one point, it fell by over 10 percent, triggering circuit breakers for the first time in four years.

Worries about a potential US recession as well as overpriced tech stocks linked to artificial intelligence sent Japan’s benchmark Nikkei plummeting 12.4 percent Monday, the largest one-day fall since October 1987, and Taiwan’s Taiex gauge tumbling 8.4 percent, the worst selloff since 1967.

The free fall on Tuesday came even though the US Federal Reserve, which recently left key rates unchanged, hinted at a possible cut in September. The positive signal was eclipsed by worse-than-expected US data that showed fewer new jobs, a higher unemployment rate and slowing wage growth.

Another fear factor involved major tech stocks, some of which have led a surge in the US and other stock markets by highlighting the rosy prospect of AI-related innovation and productivity.

Tech front-runner Nvidia reportedly delayed the rollout of its next-generation “Blackwell” B200 AI chips due to a design flaw. Chipmaker Intel also announced poor quarterly earnings Thursday that resulted in its decision to lay off about 15,000 people, casting a cloud over the tech sector at large.

Seoul’s stock market, which is tech-heavy and in close sync with Wall Street, is vulnerable to major external shocks like a recession in the US or a negative shift in stance toward AI-related shares. If foreign investors begin to pull a significant amount of their money out of the local bourse, the Korean currency is bound to lose value, which in turn hurts already weak domestic demand and makes companies delay facility investment.

Tuesday’s rebound is a welcome reprieve, but there are a slew of unpredictable factors that can prompt investors, both local and foreign, to place sell orders.

The Korean government and financial authorities are closely watching the latest topsy-turvy gyrations in the stock market, but they seem to be essentially optimistic about the fundamentals of the Korean market.

In an emergency meeting on the economy and financial markets Tuesday, Finance Minister Choi Sang-mok shared the view with Bank of Korea Gov. Rhee Chang-yong and Financial Services Commission chief Kim Byoung-hwan that Monday’s market crash was “excessive.” They pointed out several factors, such as a US slowdown, the yen-carry trade and renewed geopolitical tensions in the Middle East sparked massive sell-offs, but claimed that the Korean economy is well on its path toward recovery and well positioned to deal with external shocks.

But the Korean economy faces a host of roadblocks. Snowballing household debt continues to cause worries for policymakers, in step with the recovery in the housing market. The country’s economy also contracted 0.2 percent in the second quarter.

Choi and other participants said Tuesday that market participants “need to remain calm and make rational decisions.” To calm excessive jitters, the government must introduce new measures to weather a fresh wave of external volatility.