Seoul: Shares end over 1% lower as recession fears mount on economic data

[SEOUL] South Korean shares on Friday fell 1.3 per cent, the sharpest loss in more than a week, as bleak economic data from the United States and Europe heightened concerns over the fallout from the pandemic. The won weakened, while the benchmark bond yield rose.

The Seoul stock market's main Kospi closed down 25.72 points, or 1.3 per cent, to 1,889.01. For the week, the index lost 1.3 per cent and snapped a four-week winning streak.

Denting investor sentiment was US data that showed a stunning 26.5 million Americans had sought unemployment benefits since mid-March, confirming that all the jobs gained during the longest employment boom in US history have been wiped out as the novel coronavirus savages the economy.

Economic activity in the euro zone all but ground to a halt this month as the coronavirus sweeping across the world forced governments to impose lockdown and firms to down tools and shut their businesses, a survey showed on Thursday.

A closely watched Gilead Sciences Inc experimental antiviral drug failed to help patients with severe Covid-19 in a clinical trial conducted in China, but the drugmaker said the findings were inconclusive because the study was terminated early.

Disappointing coronavirus drug test results weakened investors' hopes on plateauing of the pandemic and led to the stock market's increased volatilities, said Lee Kyoung Min, an analyst at Daeshin Securities.

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South Korea's stock market has bounced back harder amid the coronavirus pandemic than any other major bourse in the world, and bond inflows lead Asia, as investors bet Seoul's handling of the crisis will see it through sooner and stronger than others. The country reported six new coronavirus cases on Friday.

Foreigners were net sellers of 207.2 billion won (S$239.3 million) worth of shares on the main board.

The won closed trading at 1,235.5 per US dollar on the onshore settlement platform, 0.5 per cent lower than its previous close at 1,229.7.

In offshore trading, the won was quoted at 1,235.1 per US dollar, down 0.2 per cent from the previous session, while in non-deliverable forward trading its one-month contract was quoted at 1,233.9. The Kospi dropped 14 per cent so far this year.

The trading volume during the session in the Kospi index was 922.1 million shares. Of the total traded issues of 900, the number of advancing shares was 167.

The won lost 6.4 per cent against the dollar so far this year.

In money and debt markets, June futures on three-year treasury bonds rose 0.05 point to 111.53.

The most liquid three-year Korean treasury bond yield fell by 1.4 basis points to 1.024 per cent, while the benchmark 10-year yield gained 0.4 basis points to 1.549 per cent.

REUTERS