Stocks close lower over worries about aggressive rate hikes

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,596.58 points on Monday, down 7.66 points, or 0.29 percent, from the previous trading day. [YONHAP]

Stocks finished lower Monday amid investors' jitters over possibly aggressive rate hikes in major economies. The won slightly rose against the dollar.

The Kospi fell 7.66 points, or 0.29 percent, to close at 2,596.58.

Trading volume was moderate at 767.29 million shares worth 8.38 trillion won ($6.5 billion), with gainers outpacing decliners 542 to 315.

Foreigners offloaded a net 17.2 billion won of stocks and institutions 99.7 billion won, while individuals bought a net 63.3 billion won of stocks.

Seoul stocks opened higher Monday, tracking Wall Street gains boosted by Federal Reserve Chair Jerome Powell's remarks that the U.S. central bank was not "actively considering" a more aggressive 75-basis-point hike.

But the market soon pared earlier gains following Bank of Korea Gov. Rhee Chang-yong's comments that he is not eliminating the option of a 50-basis-point rate hike, as uncertainty about already-elevated inflation remains high.

"It is not the stage where we can completely rule out the possibility of a big step hike," Rhee said, adding "Whether we could consider (a 0.5-percentage point increase) will rest on how much inflation rises going forward."

Last month, the BOK raised the policy rate by a quarter-percentage point to 1.5 percent as part of efforts to tamp down rising inflation and curb household debt.

"The Kospi is facing downward pressures as concerns are growing over the Chinese economy's potential hard landing following April's economic data," analyst Park Sang-hyun of Hi Investment & Securities said.

Samsung Electronics shed 0.3 percent to 66,300 won, SK hynix lost 1.78 percent to 110,500 won.

Kakao gained 0.61 percent to 82,300 won, and KB Financial added 0.69 percent to 58,700 won.

The local currency ended at 1,284.10 won against the dollar, down 0.1 won from the previous session's close.

The Kosdaq gained 3.17 points, or 0.37 percent, to close at 856.25 points.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds advanced 14.4 basis points to 3.051 percent, and the yield on the benchmark 10-year government bond gained 6.3 basis points to 2.91 percent.

BY CHO JUNG-WOO, YONHAP [cho.jungwoo1@joongang.co.kr]