Shares end lower Thursday after Fed signals plans for additional rate hikes

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,360.97 points on Thursday, down 38.28 points, or 1.60 percent, from the previous trading day. [YONHAP]

Shares ended lower Thursday after the U.S. Federal Reserve signaled its plans for additional interest rate hikes next year with the warning of an economic slowdown. The won fell against the dollar.

The Kospi fell 38.28 points, or 1.60 percent, to close at 2,360.97. Trading volume was light at 366.15 million shares worth 6.03 trillion won ($4.6 billion), with decliners outstripping gainers 540 to 307.

Institutions and foreigners sold a combined 495 billion won worth of stocks, exceeding individuals' stock purchases valued at 460 billion won.

Overnight, the Dow Jones Industrial Average lost 0.4 percent to 33,966.35, and the tech-heavy Nasdaq Composite declined 0.8 percent to 11,170.89.

The decline came after the Federal Open Market Committee (FOMC) raised its benchmark rate by 50 basis points to a range of 4.25 percent to 4.5 percent.

The Fed policymakers forecast rates would end next year in a range of 5 percent to 5.25 percent, a higher level than previously indicated.

Fed Chair Jerome Powell also said the Fed will not reduce rates until it is really confident that inflation is coming down in a sustained way.

The Fed's hawkish outlook poured cold water on expectations that the U.S. central bank could slow down its monetary tightening next year, analysts said.

"On top of rate hike worries, the dollar's strength and foreign selling also weighed on the main index, with no particular upside momentum in the market," said Park Hee-cheol, an analyst at Mirae Asset Financial Group.

Most large-cap stocks declined. Samsung Electronics fell 2 percent to 59,300 won, SK hynix Inc. declined 2 percent to 80,200 won, Hyundai Motor dropped 0.9 percent to 162,000 won, and Korean Air shed 1.6 percent to 24,850 won.

The won ended at 1,303.10 won against the dollar, up 6.80 won from the previous session's close.

The Kosdaq fell 6.32 points, or 0.87 percent, to close at 722.68 points.

Bond prices, which move inversely to yields, ended mixed. The yield on three-year government bonds added 2.8 basis points to 3.558 percent, and the yield on 10-year government bonds shed 2.8 basis points to 3.477 percent.

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