Seoul: Stocks, won drop on Fed rate-hike bets, China slowdown fears
SOUTH Korean shares fell on Monday (Apr 25) by their most in 7 weeks on concerns of aggressive monetary policy tightening in the US and an economic slowdown in China. The Korean won dropped to its lowest in more than 2 years, while the benchmark bond yield also slumped.
The benchmark Kospi closed down 47.58 points, or 1.76 per cent, at 2,657.13. The index marked its sharpest fall since Mar 7, and lowest close since Mar 15.
The US Federal Reserve’s stronger pivot to a hawkish stance and worries of more Covid-19 lockdowns in China dragged the market lower, said Samsung Securities’ analyst Seo Jung-hun.
South Korea’s central bank will release advanced gross domestic product data for the first quarter on Tuesday, with growth likely slowed down significantly as restrictions imposed to prevent the spread of Covid-19 slammed the brakes on consumer spending.
SK Bioscience jumped 6.67 per cent after the company said trial results of its Covid-19 vaccine suggested more effectiveness in preventing infections than that of Astrazeneca’s.
Foreigners were net sellers of 733.4 billion won (S$807.1 million) worth of shares on the main board.
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South Korea’s foreign exchange authority issued a verbal warning against volatile currency market movement as the won fell to its weakest since March 2020.
The won closed trading at 1,249.9 per dollar on the onshore settlement platform, 0.86 per cent lower than its previous close and marking its lowest level since Mar 24, 2020.
In offshore trading, the won was quoted at 1,250.5 per dollar, down 0.5 per cent from the previous day, while in non-deliverable forward trading its 1-month contract was quoted at 1,252.2.
In money and debt markets, June futures on 3-year treasury bonds rose 0.3 point to 105.55 in late afternoon trade.
The most liquid 3-year Korean treasury bond yield fell by 8.6 basis points to 2.9 per cent, while the benchmark 10-year yield fell by 11.5 basis points to 3.232 per cent. REUTERS
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