Stocks retreat as Fed minutes suggest more rate rises

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,508.05 points on Thursday, down 8.42 points, or 0.33 percent, from the previous trading day. [YONHAP]

Shares closed lower Thursday as investors digested Federal Reserve minutes that hinted at more aggressive interest rate hikes to temper inflation. The won fell against the dollar.

The Kospi fell 8.42 points, or 0.33 percent, to close at 2,508.05 points.

Trading volume was moderate at about 370.84 million shares worth 6.98 trillion won ($5.3 billion), with losers outnumbering gainers 542 to 301.

Institutions sold a net 446 billion won worth of stocks, offsetting foreigner and individual combined purchases valued at 440 billion won.

In the minutes released Wednesday, Fed policymakers projected the economy to expand in the second half of 2022 and made it clear that they intend to continue raising rates enough to cool the economy and combat inflation.

The Fed raised its benchmark interest rate by 75 basis points in July for a second straight time.

"Definitely, the Fed's stance toward further tightening weighed on the market. Investors are concerned about aggressive rate hikes by central banks around the globe to tame inflation, which could result in a global recession," No Dong-kil, an analyst at Shinhan Investment, said by phone.

Most large-cap stocks declined.

SK hynix fell 1.4 percent to 95,700 won. Hyundai Motor declined 2.1 percent to 186,000 won, and Korean Air Lines shed 1.9 percent to 26,500 won.

Among gainers, Samsung Electronics rose 1.8 percent to 61,500 won, SK Innovation climbed 0.2 percent to 210,500 won and state-run Korea Gas Corp. gained 1.1 percent to 41,700 won.

Internet-based company stocks continued to fall, with Kakao falling 1.12 percent to 79,200 won and Naver shedding 3.10 percent to 250,000 won.

The local currency closed at 1,320.70 won against the dollar, up 10.40 won from the previous session's close.

The Kosdaq fell 1.36 points, or 0.16 percent, to close at 826.06 points.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds climbed 3.7 basis points to 3.125 percent, and the yield on the 10-year government bond rose 8.8 basis points to 2.90 percent.

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