Kospi falls 1.76% on Fed tightening worries

Finance

Published: 25 Apr. 2022, 17:58

Kospi falls 1.76% on Fed tightening worries

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,657.13 points on Monday, down 47.58 points, or 1.76 percent, from the previous trading day. [NEWS1]

Stocks fell for a second straight session to retreat more than 1.5 percent Monday, as worries over the U.S. Federal Reserve signaling an aggressive rate hike next week dampened investor sentiment. The local currency fell against the dollar.

The Kospi closed down 1.76 percent, or 47.58 points, to 2,657.13. Trading volume was heavy at 988.3 million shares with decliners far outpacing gainers 761 to 142.

Foreigners unloaded a net 720.3 billion won ($586.1 million) worth of stocks, with institutions selling off a net 348 billion won. Retail investors scooped up a net 1.1 trillion won.

"The Fed's move for a rate hike has widely been expected since its March minutes were released, but the hawkish remarks last week by Fed Chairman Powell amplified the concerns about bolder than expected monetary tightening," Han Ji-young, an analyst at Kiwoom Securities.

Fed Chairman Jerome Powell indicated last week it will accelerate the monetary tightening with a series of rate increases this year to tame inflation, possibly starting with a 0.5 percentage-point rate hike in its next policy meeting set for May 3-4.

Stocks will move in volatile sessions this week, hinging on the outcome of the first-quarter business performance by major Korean companies, Han added.

Samsung Electronics slid 1.04 percent to 66,300 won, and SK hynix lost 2.26 percent to 108,000 won.

Naver fell 3.83 percent to 288,500 won and Kakao dipped 2.5 percent to 89,700 won.

Hyundai Motor pared earlier losses and closed the session 1.11 percent higher to 182,000 won, after it reported the largest first-quarter operating profit in nearly eight years.

The Kosdaq dropped 22.94 points, or 2.49 percent, to close at 899.84 points.

The local currency ended at 1,249.90 won against the dollar, up 10.8 won from Friday's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds declined 10.2 basis points to 2.884 percent, and the yield on the benchmark 10-year government bond dropped 1.5 basis points to 2.89 percent.

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