Seoul: Stocks end at 5-week low as hawkish Fed lifts US yields, dollar

[SEOUL] South Korean shares ended at a 5-week low on Thursday (Jan 6), weighed down by elevated US yields and a firmer dollar, as minutes of the Federal Reserve meeting signaled a sooner-than-expected start to rate hikes, dampening risk appetite.

The Korean won weakened to its lowest level in around 17 months, while the benchmark bond yield rose.

The benchmark Kospi closed down 33.44 points, or 1.13 per cent, at 2,920.53, following a 1.18 per cent decline on Wednesday.

Among the heavyweights, chip giants Samsung Electronics and SK Hynix fell 0.65 per cent and 0.40 per cent, respectively, while platform companies Naver and Kakao dropped 4.65 per cent and 5.21 per cent each.

According to minutes of the Fed's December policy meeting, US central bank policymakers said a "very tight" job market and unabated inflation might require it to raise rates sooner and begin reducing its overall asset holdings.

Institutional investors extended their sell-off in equities that went ex-dividend on Dec 29, having sold net 5.86 trillion won (S$6.6 billion) worth of Kospi shares during their 6-day selling spree.

Foreigners, however, were net buyers of 182.5 billion won worth of shares.

Only those who purchased equities by Dec 28 can receive dividend payments, which led to a buying spree by institutional and foreign investors.

The won ended at 1,201.0 per dollar on the onshore settlement platform, its lowest close since Jul 24, 2020 and 0.34 per cent lower than its previous close.

In offshore trading, the won was quoted at 1,201.6, while in non-deliverable forward trading its 1-month contract was quoted at 1,202.5.

In money and debt markets, March futures on 3-year treasury bonds fell 0.43 point to 108.22.

The benchmark 10-year yield rose by 10.5 basis points to 2.480 per cent.

REUTERS