Seoul: Stocks track Wall Street losses on hawkish Fed

[SEOUL] South Korean shares fell on Monday, catching the tailwind from a retreat on Wall Street, as investors remained wary of a more hawkish stance from the US Federal Reserve. The won weakened to a one-month low and the benchmark bond yield fell.

The benchmark Kospi was down 25.21 points or 0.77 per cent at 3,242.72, as of 1.42am GMT.

The three main Wall Street indices finished sharply lower on Friday, after investors were spooked by hawkish interest rate comments by Federal Reserve official James Bullard.

Investor confidence in their existing positions was initially dinged by the Fed's policy meeting, where it projected US interest rate hikes would happen sooner than anticipated, and signalled it was reaching the point where it could begin talking about tapering its massive stimulus - as opposed to just thinking about it.

Among heavyweights, chip giants Samsung Electronics and SK Hynix fell 0.75 per cent and 1.61 per cent, respectively, while battery maker LG Chem and internet giant Naver slid 0.12 per cent and 0.38 per cent, respectively.

Foreigners were net sellers of 433.7 billion won (S$514.5 million) worth of shares on the main board.

"With the strong US dollar, it's a difficult condition to attract foreign inflow ... Fed Chairman Jerome Powell's testimony this week is also closely watched," Na Jeong-hwan, an analyst at Cape Investment & Securities, said.

The won was quoted at 1,133.9 per dollar on the onshore settlement platform, 0.14 per cent lower than its previous close of 1,132.3. It fell as much as 0.28 per cent to the lowest since May 18.

In offshore trading, the won was quoted at 1,133.8 per dollar, up 0.1 per cent from the previous day, while in non-deliverable forward trading its one-month contract was quoted at 1,133.2.

In money and debt markets, September futures on three-year treasury bonds fell 0.04 point to 110.26.

The most liquid three-year Korean treasury bond yield rose by 2.6 basis points to 1.339 per cent, while the benchmark 10-year yield fell by 3.8 basis points to 2.003 per cent.

REUTERS