Seoul: Stocks, won drop over 1% after US CPI data

SOUTH Korean shares and won weakened more than 1 per cent on Thursday (May 12), amid a broader decline in Asian markets, after the US inflation data did little to allay investor concerns over policy tightening and economic growth. The benchmark bond yield also dropped.

The Kospi ended down 42.19 points, or 1.63 per cent, to 2,550.08, its lowest close since Nov 19, 2020.

The benchmark index fell for an eighth straight session, logging the longest losing streak since mid-August 2021.

US consumer price growth slowed sharply in April as gasoline eased off record highs, suggesting inflation had probably peaked, though it is likely to stay hot for a while and keep the Federal Reserve’s foot on the brakes to cool demand.

The headline inflation seemed to have peaked but core prices accelerated, disappointing investors that there would be nothing to stop monetary tightening but an economic recession, said Huh Jae-hwan, analyst at Eugene Investment & Securities.

South Korea is due to announce its second extra budget for this year later in the day, drawn up to pay small businesses for their losses due to Covid-19 restrictions.

Among the heavyweights, technology giant Samsung Electronics and peer SK Hynix fell 1.22 per cent and 1.36 per cent respectively, while battery maker LG Energy Solution lost 0.89 per cent. Internet platform operators Naver and Kakao dropped 3.23 per cent and 5.5 per cent each.

Foreigners were net sellers of 279.3 billion won (S$302 million) worth of shares on the main board.

The won closed trading 1.03 per cent lower at 1,288.6 per dollar on the onshore settlement platform, after hitting a 26-month low of 1,291.5. The currency marked its lowest close since Jul 14, 2009.

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In offshore trading, the won was quoted at 1,288.3 per dollar, down 0.7 per cent from the previous day, while in non-deliverable forward trading its 1-month contract was quoted at 1,288.2.

In money and debt markets, June futures on 3-year treasury bonds rose 0.07 point to 105.64 in late afternoon trade.

The most liquid 3-year Korean treasury bond yield fell by 3.2 basis points to 2.903 per cent, while the benchmark 10-year yield fell by 9 basis points to 3.183 per cent. REUTERS