SEOUL– Seoul shares ended lower to extend their falls for the third consecutive day Monday as investors remain concerned the U.S. Federal Reserve’s additional rate hikes could result in a global recession next year. The Korean won rose against the U.S. dollar.
The benchmark Korea Composite Stock Price Index (KOSPI) fell 7.85 points, or 0.33 percent, to close at 2,352.17, extending its losing streak to a third session.
The trading volume was moderate at 312.32 million shares worth 4.85 trillion won (US$3.72 billion), with decliners outstripping gainers 566 to 303.
On Friday, the Dow Jones Industrial Average dropped 0.8 percent to 32,920.46, and the tech-heavy Nasdaq Composite lost 1 percent to 10,705.41.
Last week, the Fed signaled its plans for additional interest rate hikes next year with the warning of an economic slowdown. Fed officials forecast rates would end next year in a range of 5 percent to 5.25 percent, a higher level than previously indicated.
Fed Chair Jerome Powell also said the Fed will not reduce rates until it is really confident that inflation is coming down in a sustained way.
The risk of higher interest rates is fueling investor concerns over a U.S. recession in 2023 and reducing the appetite for risky assets, analysts said.
“A wave of rate hikes and hawkish comments from other central banks, such as the European Central Bank, added to the woes of investors. Falls in the Chinese stock market also weighed on the sentiment,” Park Hee-cheol, an analyst at Mirae Asset Financial Group, said.
Large-cap stocks were mixed across the board.
Market bellwether Samsung Electronics Co. remained unchanged at 59,500 won, No. 2 chipmaker SK hynix Inc. rose 0.8 percent to 79,000 won, the country’s sole aircraft manufacturer Korean Aerospace Industries Co. advanced 3.4 percent to 48,900 won, and the state-run Korea Gas Corp. gained 0.7 percent to 36,950 won.
Among decliners, top carmaker Hyundai Motor Co. fell 2.2 percent to 159,000 won, leading tiremaker Hankook Tire & Technology Co. shed 0.9 percent to 33,250 won, and leading cosmetics firm AmorePacific Corp. was down 0.4 percent to 132,000 won.
Hyundai Motor plunged 3.08 percent to an intraday low of 157,500 won during the session due to concerns of the impact of the U.S. inflation law on its fourth-quarter earnings results.
The Inflation Reduction Act (IRA), signed into law by President Joe Biden in August, offers government tax credits of up to US$7,500 to buyers of new electric vehicles but only those assembled in North America that also meet all other criteria, such as the origin of minerals used in EV batteries.
An official at Hyundai Motor recently said the company may be forced to reconsider its planned investment to build an EV-dedicated plant in Georgia.
The Korean won ended at 1,302.90 won against the U.S. dollar, up 2.50 won from the previous session’s close.
Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 0.6 basis point at 3.545 percent, and the return on the benchmark five-year government bond climbed 0.3 basis point to 3.445 percent.
Source: Yonhap News Agency