Stocks fall, ending 3-day run, ahead of Fed, on banking woes

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Stocks fall, ending 3-day run, ahead of Fed, on banking woes

Published: 03 May. 2023, 17:11 Updated: 03 May. 2023, 18:01

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,501.40 points on Wednesday, down 0.91 percent, or 22.99 points, from the previous trading day. [NEWS1]

Stocks snapped a three-day winning streak on Wednesday as uncertainties surrounding the U.S. banking crisis reignited recession fears ahead of the Federal Reserve's policy meeting this week. The won rose against the dollar.

The Kospi retreated 22.99 points, or 0.91 percent, to close at 2,501.40. Trading volume was moderate at 877.4 million shares worth 9.72 trillion won ($7.26 billion) with decliners outnumbering gainers 524 to 341.

"U.S. regional bank risks re-emerged with moves to tighten bank loan requirements, reigniting fears over a recession," Mirae Asset analyst Seo Sang-young said.

"Given the prolonged concerns over high inflation, the possibility of the Fed making hawkish comments after its policy meeting has dampened investor sentiment," Seo said.

Market watchers bet the Fed is likely to signal an end to its rate hike cycle after raising the interest rate by 0.25 percentage point at the end of the Federal Open Market Committee meeting on Wednesday.

Wall Street ended the session down overnight as uncertainties arose over the financial system following the sale of the First Republic Bank to JPMorgan Chase, led by Federal Deposit Insurance Corp.

In Seoul, chemical and tech stocks led the decline.

Samsung Electronics lost 0.46 percent to 65,400 won.

LG Energy Solution slumped 4.06 percent to 567,000 won, and LG Chem dipped 2.68 percent to 726,000 won.

Battery components maker Posco Future M slid 2.13 percent to 345,000 won.

Entertainment agency Hybe closed up 3.51 percent to 294,500 won following its record high quarterly earnings the previous day.

SK IE Technology, a battery separator manufacturer, jumped 6.1 percent to 83,500 won on rosy prospects as it is expected to benefit heavily from the U.S. Inflation Reduction Act designed to boost domestic production of green energy products.

The local currency ended at 1,338.20 won against the dollar, down 3.9 won from Tuesday's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds lost 4.8 basis points to 3.287 percent, and the yield on the benchmark 10-year government bonds dropped 14.3 basis points to 3.427 percent.

BY SOHN DONG-JOO, YONHAP [sohn.dongjoo@joongang.co.kr]