Stocks flat after Fed announces 0.25% rate hike
Published: 04 May. 2023, 17:08
Stocks closed almost flat Thursday after the U.S. Federal Reserve spurned the possibility of an imminent end to the rate hike cycle and ruled out a rate cut for the foreseeable future. The won rose sharply against the dollar.
The Kospi fell 0.46 points, or 0.02 percent, to 2,500.94. Trading volume was moderate at 797.8 million shares worth 9.85 trillion won ($7.43 billion), with decliners slightly outnumbering gainers 437 to 429.
"Powell blocked market expectations for a rate cut in advance, saying it's not 'appropriate' at this stage as inflation is unlikely to cool rapidly," Han Ji-young, an analyst at Kiwoom Securities, said, referring to Fed Chair Jerome Powell.
"This appears to have brought disappointment to markets," Han said.
Powell said after the Federal Open Market Committee (FOMC) meeting that it's too soon to say the rate hike cycle is over.
The U.S. central bank raised the interest rate by 0.25 percentage point to a range of 5 to 5.25 percent at the end of the FOMC meeting Wednesday, the 10th consecutive hike since March 2022.
Although the Fed statement showed a change in language to the effect that it lowers the chances for further rate increases in the future, Powell made it clear in a press conference that the Fed will maintain the restrictive policy if necessary as it examines the market impact.
In Seoul, tech and auto stocks fell while bio and heavy machinery gathered ground.
Samsung Electronics fell 0.46 percent to 65,100 won, with SK hynix losing 1.22 percent to 88,700 won.
LG Energy Solution slid 0.53 percent to 564,000 won.
Samsung Biologics rose 2.84 percent to 797,000 won, and SK Bioscience spiked 16.39 percent to 83,100 won on media reports that it won a contract from Merck.
The won ended at 1,322.80 against the dollar, down 15.4 won from Wednesday's close.
Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds lost 7.9 basis points to 3.208 percent, and the yield on the benchmark 10-year government bonds dropped 8.6 basis points to 3.341 percent.
BY SOHN DONG-JOO, YONHAP [sohn.dongjoo@joongang.co.kr]
with the Korea JoongAng Daily
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