Stocks fall more than 1 percent following Powell's comments

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,431.91 points on Wednesday, down 31.44 points, or 1.28 percent, from the previous trading day. [NEWS1]

Stocks dipped by more than 1 percent to snap a five-day winning streak Wednesday on renewed rate hike fears.

The Kospi lost 31.44 points, or 1.28 percent, to finish at 2,431.91. Trading volume was moderate at 413.6 million shares worth 9.5 trillion won ($7.2 billion), with decliners outnumbering gainers 697 to 195.

The index opened sharply lower and remained in negative territory throughout the session, as investor sentiment was dampened after Federal Reserve Chair Jerome Powell delivered hawkish comments on the central bank's next policy direction Tuesday.

Foreign and institutional investors sold off a combined 974.1 billion won, while retail investors purchased a net 942.2 billion won.

"The Kospi fell as Powell's hawkish comments prodded investors to lock in recent gains," analyst Lee Kyoung-min from Daishin Securities said.

Investors are gearing up for the release of key U.S. job data later this week, to see if it could offer any clues on the Fed's future monetary policy direction.

Powell's comments, along with data pointing to strong fundamentals of the U.S. economy, is stoking projection that the Fed may deliver another 50-basis point rate increase, sharper than a 25-basis point hike that market players had expected, to tame inflation.

In Seoul, large cap shares closed lower across the board with tech heavyweights stung hard.

Samsung Electronics declined 0.66 percent to 60,300 won and SK hynix dipped 2.36 percent to 86,800 won.

SM Entertainment's stock on Wednesday closed at 158,500 won, up 5.88 percent from the previous trading day. Hybe fell 5.99 percent to 177,200 won, amid the ongoing proxy battle with SM Entertainment.

The local currency closed at 1,321.4 won against the dollar, up 22 won from the previous session's close, the sharpest change since Feb. 6.

Bond prices, which move inversely to yields, closed sharply lower. The yield on three-year government bonds rose 13.1 basis points to 3.857 percent, and the yield on the benchmark 10-year government bonds was up 0.5 basis points to 3.968 percent.

BY SEO JI-EUN, YONHAP [seo.jieun1@joongang.co.kr]