Kospi drops 1.1% with worse-than-expected U.S. inflation data

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,620.42 points on Wednesday, down 1.10 percent, or 29.22 points, from the previous trading session. [NEWS1]

Shares snapped a three-session winning streak Wednesday as hotter-than-expected U.S. inflation data for January cooled investor sentiment.

The Kospi fell 29.22 points, or 1.1 percent, to close at 2,620.42.

Trade volume was moderate at 534.17 million shares worth 9.93 trillion won ($7.4 billion), with decliners outnumbering gainers 509 to 378.

Institutions sold a net 535.7 billion won worth of stocks, offsetting stock purchases by foreigners and individuals valued at 516.5 billion won.

Investors have been expecting the U.S. Federal Reserve to start cutting interest rates this year amid hopes of eased inflation, but January's consumer price index report threw cold water on such expectations, analysts said.

Overnight, the Dow Jones Industrial Average fell 1.4 percent to 38,272.75, and the tech-heavy Nasdaq declined 1.8 percent to 15,655.60.

In Seoul, tech, auto, airline, insurance, finance and retail stocks led the decline.

Samsung Electronics fell 1.6 percent to 74,000 won. SK hynix declined 0.9 percent to 148,700 won and Hyundai Motor dropped 1.4 percent to 245,500 won. Korean Air shed 1.5 percent to 23,300 won.

Among gainers, POSCO Future M, the battery materials unit of POSCO Holdings, rose 3.4 percent to 285,500 won. Hankook Tire & Technology climbed 2.8 percent to 54,400 won. Hybe, the parent company of K-pop superband BTS' management agency BigHit, jumped 6.3 percent to 218,500 won.

"Most shares in various sectors fell as investors lost their appetite for risky assets, causing the Korean market to see an outflow of funds on Wednesday," Roh Dong-gil, an analyst from Shinhan Securities, said.

The Kosdaq, on the other hand, closed higher than the previous session, up 8.15 points to close at 853.30.

Foreigners and institutions offloaded a net 65.8 billion won and 58.5 billion won, respectively, while retail investors bought a net 126 billion won, with semiconductor and IT equipment shares the main gainers.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds rose 7.3 basis points to 3.429 percent, and the return on the U.S.' benchmark 10-year government bonds rose 13.1 basis points to 4.315 percent.

The local currency closed at 1,335.40 won against the greenback, up 7.3 won from the previous session's close.

BY LEE SOO-JUNG, YONHAP [lee.soojung1@joongang.co.kr]