Stocks drop for a fourth day as recession fears increase

Finance

Published: 04 Jul. 2022, 17:23

Stocks drop for a fourth day as recession fears increase

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,300.34 points on Wednesday, down 5.08 points, or 0.22 percent, from the previous trading day. [YONHAP]

Stocks dipped for a fourth consecutive day to hit a fresh 20-month low Monday as investors worry the U.S. Federal Reserve's move to curb inflation may trigger a deeper-than-expected economic recession. The local currency inched up against the dollar.

After choppy trading, the Kospi fell 5.08 points, or 0.22 percent, to close at 2,300.34, the lowest since 2,300.16 on Nov. 2, 2020. The index dipped to an intraday low of 2,276.63 points.

Trading volume was light at 461.9 million shares worth 7.24 trillion won ($5.57 billion) with declining stocks far outstripping advancing ones 693 to 188.

"The market is continuing to fluctuate as investors remain wary over the Fed's planned rate hikes and recession fears amid no fresh leads to drive the market," said Han Ji-young, an analyst at Kiwoom Securities.

Major U.S. indexes Friday reversed their earlier losses to end higher, as investors speculated whether weaker-than-expected economic indicators would prod the Fed to slow down on its drastic rate hike plans in the face of decades-high inflation.

The U.S. Institute for Supply Management's Purchasing Managers' Index came to 53, lower than the market expectation and that of the previous month, putting more weight on the view that the economy is slowing and inflation may have peaked.

Major builders, shipbuilders and chemical companies drove down the Kopsi. Hyundai Engineering & Construction fell 3.36 percent to 40,300 won, and LG Chem lost 1.77 percent to 500,000 won.

LG Energy Solution and Samsung SDI, two battery makers, also retreated 0.14 percent to 356,000 won and 1.17 percent to 506,000 won, respectively.

Samsung Electronics advanced 1.6 percent to 57,100 won, and SK hynix rose 1.83 percent to 89,100 won.

The local currency ended at 1,297.10 won against the dollar, up 0.2 won from Friday's close.

The Kosdaq lost 6.75 points, or 0.93 percent, to close at 722.73 points.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year government bonds gained 0.7 basis points to 3.445 percent, and the yield on the benchmark 10-year government bond lost 11.8 basis points to 2.89 percent.

BY LIM JEONG-WON, YONHAP [lim.jeongwon@joongang.co.kr]