Stocks drop on possibility of U.S. Fed raising rates
Stocks ended a five-session winning streak Thursday as investor appetite for risky assets weakened after the Federal Reserve's comments about an earlier-than-expected timeline for a rate hike. The won fell against the dollar.
The tech-laden Kosdaq index closed at 1,003.72 points, up 0.52 percent, or 5.23 points, from the previous session's close, surpassing the 1,000-point threshold for the first time in two months. The index closed at an all-time high of 1,021.01 points on April 27.
The benchmark Kospi fell 13.72 points, or 0.42 percent, to close at 3,264.96 points.
Trading volume was moderate at about 1.8 billion shares worth some 14.4 trillion won ($12.7 billion), with losers outnumbering gainers 495 to 335.
Foreigners sold a net 357 billion won, while retail investors bought 1 trillion won. Institutions offloaded a net 686 billion won.
Stocks opened lower after the key stock index set an all-time record the previous session.
The loss came after Federal Reserve Chairman Jerome Powell said the Fed began discussing measures to scale back accommodative policies. Fed officials expect two rate hikes by the end of 2023.
Overnight, the Dow Jones Industrial Average fell 0.77 percent, with the Nasdaq Composite and the S&P 500 down 0.24 percent and 0.54 percent, respectively.
"The FOMC's dot plot showed stronger signs [of economic rebound] than expected," said IBK Securities analyst Ahn So-eun.
"The steeper-than-expected recovery prompted the Fed to start discussing the rate hikes – going a step further from simply scaling back its asset-buying program," she said.
In Seoul, Samsung Electronics dropped 1.1 percent to 80,900 won, and chipmaker SK hynix retreated 2.32 percent to 126,500 won.
Internet portal operator Naver lost 0.38 percent to 389,500 won. Its rival Kakao jumped 3.5 percent to finish at a new record at 148,000 won.
Automaker Hyundai Motor shed 1.25 percent to 236,500 won, while chemical firm LG Chem gained 3.34 percent to 835,000 won.
The local currency closed at 1,130.4 won against the dollar, sharply up 13.2 won from the previous session's close on the Fed's strong signal about the faster-than-expected rate hike.
Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds gained 4.1 basis points to 1.327 percent, and the yield on the benchmark 10-year government bond added 8.2 basis points to 1.58 percent.
BY LEE TAE-HEE, YONHAP [firstname.lastname@example.org]