Stocks fall 2.56 percent ahead of Federal Reserve meeting

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,720.39 points on Tuesday, down 71.61 points, or 2.56 percent, from the previous trading day. [YONHAP]

Stocks fell to an almost 14-month low Tuesday as investors are bracing for hawkish comments from the U.S. Federal Reserve. The won fell against the dollar.

The benchmark Kospi plunged 71.61 points, or 2.56 percent, to close at 2,720.39 points. The reading marks the lowest number since the 2,700.93 point closing on Dec. 8, 2020.

Trading volume was moderate at about 630 million shares worth some 11.5 trillion won ($9.6 billion), with losers outnumbering gainers 862 to 55.

Foreigners dumped a net 470 billion won worth of stocks and institutions offloaded 171 billion won, while retail investors bought 586 billion won.

After a weak start, the key stock index plummeted quickly amid massive foreign sell-offs.

Stocks extended their losing streak to a third session, largely as investors are worried that the U.S. central bank may hint at more hawkish policies than the market consensus.

The Federal Reserve is scheduled to end its two-day monetary policy meeting Wednesday, which is expected to give clues on its monetary policy direction.

The record-high virus tally also added to the concerns about stronger quarantine measures.

It marked the first time the new daily case number broke the 8,000 since the country reported the first Covid-19 infection on Jan. 20, 2020.

"It seems like investor appetite for risky assets seems to have withered," Meritz Securities analyst Lee Jin-woo said.

Most large caps closed down in Seoul.

Samsung Electronics lost 1.46 percent to 74,000 won, and chipmaker SK hynix decreased 0.84 percent to 118,000 won.

LG Chem slumped 4.17 percent to 643,000 won, with Samsung SDI dipping 5.87 percent to 642,000 won.

Internet portal operator Naver lost 1.98 percent to 322,000 won while Kakao decreased 2.67 percent to 87,600 won.

Pharmaceutical company Samsung Biologics declined 3.82 percent to 780,000 won and Celltrion declined 4.8 percent to 158,500 won.

Carmaker Hyundai Motor retreated 1.27 percent to 194,500 won.

The local currency closed at 1,198.6 won to the U.S. dollar, up 2.5 won from the previous session's close.

The Kosdaq lost 25.96 points, or 2.84 percent, to close at 889.44.

The Kosdaq moved higher at the start of trading but turned negative to close below the 900 point mark as the investors grew wary of hawkish turn in U.S. monetary policy.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds gained 6.3 basis points to 2.174 percent, and the yield on the benchmark 10-year government bond rose 0.8 basis point to 1.76 percent.

BY SHIN HA-NEE, YONHAP [shin.hanee@joongang.co.kr]