Seoul: Shares end lower as pandemic woes outweigh US stimulus optimism

[SEOUL] South Korean shares inched down on Thursday as the country continued to report near-record daily Covid-19 cases, overshadowing central banks' policy support and hopes of US stimulus. The won and the benchmark bond yield strengthened.

The benchmark Kospi closed down 1.36 points or 0.05 per cent at 2,770.43, after falling as much as 1.1 per cent in early trade.

South Korea reported a record number of coronavirus deaths and the third highest in daily infections on Thursday, threatening public health system and sparking panic buying in anticipation of a harsh new lockdown.

The government on Thursday cut its 2021 growth forecast and vowed to continue to support workers and exporters as a resurgence of the coronavirus has delayed its recovery and forced the government to keep its fiscal taps wide open.

The Bank of Korea said accumulating financial imbalances remain a worry, but that it will maintain its accommodative policy approach as low interest rates were not the main reason for the shakeout.

The bank also said it has agreed to renew an existing currency swap agreement with the US Federal Reserve (Fed) by another six months until at least Sept 30, 2021.

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The Fed said it would stick with its policy of low interest rates, while legislators moved closer to agreeing on an additional US$900 billion of Covid-19 aid, including US$600 to US$700 stimulus checks and extended unemployment benefits.

Foreigners were net sellers of 301.1 billion won (S$365.5 million) worth of shares on the main board.

The won ended at 1,093.3 per US dollar on the onshore settlement platform, 0.06 per cent higher than its previous close at 1,094.0.

In offshore trading, the won was quoted at 1,092.4 per dollar, unchanged from the previous session, while in non-deliverable forward trading its one-month contract was quoted at 1,089.5.

In money and debt markets, March futures on three-year treasury bonds fell 0.06 point to 111.39.

The most liquid three-year Korean treasury bond yield rose by 1.1 basis points to 0.999 per cent.

REUTERS