Stocks close lower Thursday as rate hike fears return

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,610.85 points on Thursday, down 0.18 percent, or 4.75 points, from the previous trading session. [YONHAP]

Stocks finished lower Thursday, as rate hike woes reignited ahead of the Fed's rate-setting meeting next week. The won rose slightly against the dollar.

The benchmark Kospi fell 4.75 points, or 0.18 percent, to close at 2,610.85.

Trading volume was moderate at 570.8 million shares worth 11.25 trillion won ($8.63 billion), with losers outpacing gainers 503 to 369.

Institutions and retail investors scooped up a net 316.18 billion won and 67.8 billion won worth of local shares, respectively, while overseas investors dumped a net 392.2 billion won.

Traders await the release of the U.S. Consumer Price Index report for May and the results of the Fed's two-day rate decision, both scheduled for next week.

Wall Street closed mixed, as a recent market rally, driven by an artificial intelligence boom, paused. The Dow Jones Industrial Average added 0.27 percent, while the S&P 500 shed 0.38 percent and the Nasdaq Composite declined 1.29 percent.

Rate hike fears resurfaced overnight, partly after the Bank of Canada unexpectedly raised the benchmark interest rate by 25 basis points to 4.75 percent amid stubbornly high inflation.

The Fed is widely expected to freeze rates at its June meeting, but expectations are growing that it could raise rates at least one more time this year as the U.S. economy remains robust.

In Seoul, most large-cap shares lost ground.

Samsung Electronics fell 0.14 percent to close at 70,900 won, and LG Energy Solution declined 2.15 percent to 591,000 won.

Samsung SDI retreated 0.82 percent to 729,000 won, and LG Chem went down 1.21 percent to 737,000 won.

Among gainers, SK hynix added 1.57 percent to 109,700 won and Hyundai Motor rose 0.15 percent to 196,700 won. LG Electronics grew 0.8 percent to 126,700 won.

The local currency closed at 1,303.7 won against the dollar, down 0.1 won from the previous session's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds advanced 7.4 basis points to 3.543 percent, and the yield on the benchmark 10-year government bonds gained 12.3 basis points to 3.795 percent.

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