Stocks finish down on Fed's hawkish rate comments

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Stocks finish down on Fed's hawkish rate comments

Published: 19 Jun. 2023, 17:38

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,609.50 points on Monday, down 0.62 percent, or 16.29 points, from the previous trading session. [YONHAP]

Stocks finished lower Monday following hawkish comments from some U.S. central bankers signaling more rate hikes. The won sharply fell against the dollar.

The Kospi slid 16.29 points, or 0.62 percent, to close at 2,609.5. Trading volume was moderate at 711.1 million shares worth 10.95 trillion won ($8.54 billion), with gainers outpacing decliners 466 to 401.

"The Fed officials with those comments are on a different path from what the market expects — a turn to a dovish monetary policy," said Seo Sang-young, an analyst at Mirae Asset Securities.

"While market participants are optimistic about the pace of the decline in inflation, the Fed is watching out for the possibility that high inflation might stick around for longer," Seo said.

Wall Street finished lower Friday after Fed Gov. Christopher Waller said core inflation was not coming down like he expected. Richmond Fed President Thomas Barkin backed the idea of more rate hikes, citing persistent inflation.

The comments threw cold water on the market betting that the Fed will end its interest rate hike campaign this year, after a highly expected 0.25 percentage-point increase next month.

Food and tech stocks drove the Kospi down, while construction and heavy equipment companies gained ground.

Nongshim plunged 6.06 percent to 411,500 won after Finance Minister Choo Kyung-ho said the food industry needs to adjust prices in line with a slide in global wheat prices Sunday. Orion slumped 4.52 percent to 122,500 won.

Samsung Electronics lost 0.84 percent to 71,200 won, LG Energy Solution sank 4.59 percent to 561,000 won and SK hynix dipped 3.45 percent to 114,800 won.

Naver fell 1.93 percent to 198,600 won, and Kakao slid 2.05 percent to 52,500 won.

Hyundai Engineering & Construction gained 3.5 percent to 39,950 won. Hanwha Aerospace spiked 17.55 percent to 137,300 won on a rosy earnings outlook.

The local currency ended at 1,282 won against the dollar, up 10.1 won from Friday's close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds advanced 0.1 basis points to 3.585 percent, and the yield on benchmark 10-year government bonds rose 3.6 basis points to 3.767 percent.

BY SOHN DONG-JOO, YONHAP [[email protected]]