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Kospi dips nearly 2% as Fed hints at fewer rate cuts in 2025

Published: 19 Dec. 2024, 17:20

SHIN HA-NEE
[email protected]

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2435.93 points on Dec. 19, down 48.5 points, or 1.95 percent, from the previous trading session. The won traded at 1,451.9 against the dollar, up 16.4 won, as of 3:30 p.m., which marked a 15-year low. [YONHAP]

Shares tumbled nearly 2 percent Thursday as risk appetite weakened after the U.S. Federal Reserve hinted at a slower monetary easing cycle next year and U.S. tech giant Micron Technology's sharp losses overnight. The won's value was sliding against the dollar.

The Kospi plummeted 48.5 points, or 1.95 percent, to close at 2,435.93.

The local currency was trading at 1,451.9 won against the greenback at 3:30 p.m., down 16.4 won from the previous session to reach a 15-year low.

The Kospi's trade volume was moderate at 492.8 million shares worth 8.3 trillion won ($5.7 billion), with losers outnumbering winners 681 to 212.

Foreigners and institutions dumped local shares worth 429.8 billion won and 504.2 billion won, respectively, as the Fed signaled fewer rate cuts in 2025 with hotter-than-expected inflation readings.

The Fed's caution sapped investors' risk appetite despite its third consecutive rate cut, also driving down major U.S. indexes overnight.

The Dow Jones Industrial Average fell 2.58 percent, the S&P 500 dropped 2.95 percent and the tech-heavy Nasdaq composite slid 3.56 percent.

Wall Street was also hit by Micron Technology's 4.33 percent fall sparked by weaker-than-expected earnings guidance. The company's shares tumbled more than 10 percent during after-hours trading.

"The Fed's hawkish stance led to the weakening of the Korean won, sparking foreign and institutional investors to flock away from the Korean market," Lee Kyoung-min, an analyst at Daishin Securities, said.

In Seoul, most blue chip tech shares steeply declined.

Samsung Electronics lost 3.28 percent to 53,100 won, while its chipmaking rival SK hynix shot down 4.63 percent to 175,000 won.

Battery maker LG Energy Solution shed 2.49 percent to 372,000 won, tracking Tesla's 8.28 percent slide overnight.

Automaker Hyundai Motor also dropped 2.08 percent to 212,000 won, and Kakao plummeted 5.07 percent to 41,200 won.

Bio shares were also weak.

Samsung Biologics dipped 2.24 percent to 958,000 won and Celltrion tumbled 3.41 percent to 192,400 won.

Shipbuilder HD Hyundai Heavy, meanwhile, surged 5.15 percent to 255,000 won.

Bond prices, which move inversely to yields, closed higher. Three-year government bond yields rose by 7.2 basis points to 2.606 percent, while the return on the benchmark 10-year U.S. government bonds soared by 11.8 basis points to 4.518 percent.

BY SHIN HA-NEE, YONHAP [[email protected]]