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Seoul shares sink 1.23 pct after Fed's rate hike

Stocks 16:02 May 06, 2022

SEOUL, May 6 (Yonhap) -- South Korean stocks fell more than 1 percent Friday, as investors fret over an economic downturn after the U.S. Federal Reserve raised the interest rate to tame high inflation. The local currency lost ground against the U.S. dollar.

The Korea Composite Stock Price Index (KOSPI) retreated 33.06 points, or 1.23 percent, to close at 2,644.51. Trading volume was heavy at 1.31 billion shares worth 10.4 trillion won (US$8.17 billion), with decliners far outpacing gainers 655 to 227.

"The market has yet to come to a consensus on Chairman Powell's remarks," Lee Kyoung-min, an analyst at Daishin Securities Co., said, adding that market fluctuations seem thus inevitable for some time.

Fed Chairman Jerome Powell said earlier this week a 0.5 percentage-point rate hike "should be on the table at the next couple of meetings" but made it clear the committee is not actively considering even more aggressive rate hikes.

Lee cited market forecasts that are still divided over the possibility of the Fed going more aggressive in its monetary tightening in the coming months. The Fed hiked the short-term rate by the widely expected 0.5 percentage point in its policy meeting Wednesday (U.S. time).

The U.S. consumer price index for April, to be released next week, will be a key point to watch, Lee added.

Shares in Seoul fell across the board, with tech, bio and financial large-caps leading the decline.

Market heavyweight Samsung Electronics slumped 2.06 percent to 66,500 won. Biotech firm Samsung Biologics sank 2.58 percent to 794,000 won.

Internet portal giant Naver also fell 3.55 percent to 272,000 won.

Mobile-only bank Kakao Bank shrank 3.26 percent to 40,100 won, with payment service provider Kakao Pay tumbling 8.17 percent to 97,800 won.

In contrast, airlines and logistic companies finished bullish. National carrier Korean Air Lines rose 2.18 percent to 30,500 won, and Asiana Airlines also climbed 1.02 percent to 19,800 won.

Logistics firm Hyundai Glovis added 0.49 percent to 207,000 won.

The local currency ended at 1,272.70 won against the U.S. dollar, down 6.4 won from Wednesday's close, as investors sought safety amid concern over an economic slowdown in the wake of the Fed's rate hike.

South Korean stock markets were closed Thursday for Children's Day.


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