Seoul: Stocks fall most in 2 months as US Treasury yields soar; won falls nearly 1%

[SEOUL] South Korea's Kospi stock index closed lower on Thursday as US Treasury yields hit multi-year highs after strong US jobs data. The Korean won shed around 1 per cent against US dollar to its weakest in more than two weeks after bullish remarks on US interest rates from the Federal Reserve chairman Jerome Powell on Wednesday. South Korean bond yields rose after central bank chief highlighted financial imbalance.

Dollar strengthened against major currencies; Federal Reserve may raise interest rates above an estimated "neutral" setting as the "remarkably positive" US economy continues to grow, Mr Powell said on Wednesday.

South Korean central bank chief Lee Ju-yeol said policies need to ease financial imbalances, highlighting household debt. The country's three-year treasury bond KTBc1 futures closed down 0.15 point, while yield of three-year treasury bond hovered about two-month high.

South Korean Finance Minister Kim Dong-yeon said he doesn't see South Korea earning the currency manipulator label by US Treasury in the next currency report.

At 0632 GMT, the Kospi was down 35.08 points or 1.52 per cent at 2,274.49, hurt by US Treasury yields hitting multi-year highs and escalating China-US trade tensions.

South Korean chemical shares dropped on soaring oil prices, with LG Chem and Lotte Chemical ending more than 6 per cent lower.

South Korea's steelmakers tumbled on escalating US-China trade tensions after a report said that China totally stopped US crude oil shipments. The country's top steelmaker Posco led the sector's loss by 6.6 per cent.

Shares of Hyundai Motor Group tumbled as auto sales are expected to weaken further in China and the United States. Hyundai Motor ended 3.1 per cent down, while Hyundai Mobis and Kia Motors fell 3.9 per cent and 3.0 per cent, respectively.

South Korean cosmetic firms including Amorepacific Group and Cosmax plunged 14.6 per cent and 7.7 per cent each on weak sentiment about Chinese buyers. Firms engaged in duty free business also closed down; Shinsegae Inc , down 12.7 per cent, led the fall.

The won was quoted at 1,129.9 per dollar on the onshore settlement platform, 0.95 per cent weaker than its previous close at 1,119.2, marking its biggest daily loss since Sept 17.

In offshore trading, the won was quoted at 1,129.67 per US dollar, down 0.46 per cent from the previous day, while in one-year non-deliverable forwards it was being asked at 1,112.95 per dollar. MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.69 per cent, after US stocks ended the previous session with mild gains. Japanese stocks weakened 0.56 per cent.

The Kospi is down around 6.4 per cent so far this year, and down by 3.07 per cent in the previous 30 days. The current price-to-earnings ratio is 12.10, the dividend yield is 1.28 per cent and the market capitalisation is 1,242.04 trillion won.

The trading volume during the session on the KOSPI index was 304,576,000 shares, and of the total traded issues of 898, the number of advancing shares was 256.

Foreigners were net sellers of 525,818 million won worth of shares. The US dollar has risen 5.94 per cent against the won this year. The won's high for the year is 1,053.55 per dollar on April 2, 2018 and low is 1,140.4 on July 19 2018.

In money and debt markets, December futures on three-year treasury bonds fell 0.18 points to 108.17. The South Korean three-month Certificate of Deposit benchmark rate was quoted at 1.65 per cent, while the benchmark three-year Korean treasury bond yielded 2.071 per cent, higher than the previous day's 2.01 per cent.

REUTERS