Seoul: Stocks fall ahead of Fed decision; bond yield hits 8-year high

SOUTH Korean shares fell for a third straight session on Wednesday (May 4), as investors exercised caution ahead of the US Federal Reserve’s monetary policy decision. The Korean won strengthened, while the benchmark bond yield rose to an 8-year high.

The benchmark Kospi closed down 2.89 points, or 0.11 per cent, at 2,677.57, after rising as much as 0.58 per cent in early trade. The index marked its lowest close in about a week.

The Fed is widely expected to hike rates by the most in a single day since 2000 to curb inflation.

Signals of the Fed raising rates aggressively in coming months are to be tail risks, said Samsung Securities’ analyst Seo Jung-hun.

South Korea’s financial markets will be closed on Thursday for a local holiday.

Samsung Electronics closed up 0.59 per cent after the company signed a multi-year deal to sell equipment to Dish for its upcoming 5G network in the US, one of the largest radio deals for the South Korean tech giant since its major Verizon contract in 2020.

Chipmaker SK Hynix and battery maker LG Energy Solution fell 0.45 per cent and 1.47 per cent, respectively.

Foreigners were net buyers of 32.7 billion won (S$35.7 million) worth of shares on the main board.

The won closed at 1,266.3 per dollar on the onshore settlement platform, 0.12 per cent higher than its previous close at 1,267.8, after hitting a session high of 1,258.6.

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Seoul: Stocks little changed; 10-year treasury yield hits 8-year high

In offshore trading, the won was quoted at 1,265.9 per dollar, down 0.4 per cent from the previous day, while in non-deliverable forward trading its 1-month contract was quoted at 1,265.7.

In money and debt markets, June futures on 3-year treasury bonds fell 0.2 point to 104.58 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield rose by 6.3 basis points to 3.201 per cent, while the benchmark 10-year yield rose by 4.2 basis points to 3.45 per cent, hitting the highest since May 2014. REUTERS