Seoul: Stocks rebound; hawkish BOK drives bond yields higher

[SEOUL] South Korean shares ended up on Thursday on dovish comments from the US Federal Reserve Chairman Jerome Powell, although concerns over new coronavirus cases staying near record high capped the gains. Both the won and the benchmark bond yield strengthened.

The Kospi ended 21.41 points or 0.66 per cent higher at 3,286.22, rebounding from a 0.20 per cent decline on Wednesday.

Mr Powell said in his congressional testimony that high inflation was for goods and services tied to the reopening and the US economy was "still a ways off" from levels the Fed wanted to see before tapering its stimulus support.

Among heavyweights, technology giant Samsung Electronics gained 1.38 per cent, while peer SK Hynix ended flat. Internet giant Naver added 1.13 per cent.

Foreigners were net buyers of 102 billion won (S$120.9 million) worth of shares on the main board.

Meanwhile, treasury bond yields jumped sharply as the Bank of Korea gave strong indications that pandemic era record-low interest rates would not continue. It, however, kept the benchmark interest rate unchanged amid the country's battle against the worst-ever virus outbreak.

South Korea reported 1,600 new Covid-19 cases, a slight drop from the previous day's record high.

The won ended at 1,141.5 per dollar on the onshore settlement platform, 0.61 per cent stronger than its previous close at 1,148.5.

In offshore trading, the won was quoted at 1,140.3 per dollar, strengthening 0.3 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,140.2.

In money and debt markets, September futures for three-year treasury bonds fell 0.40 point to 109.92.

The most liquid three-year Korean treasury bond yield rose by 10.8 basis points to 1.499 per cent, while the benchmark 10-year yield rose by 2 basis points to 2.03 per cent.


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