Seoul shares down on recession woes, Japan’s yield curve policy change

SEOUL– South Korean stocks ended lower Tuesday dragged down by investor concerns over a global recession and the Japanese central bank’s yield curve policy change that heralds a possible monetary tightening. The Korean won sharply strengthened against the U.S. dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) fell 18.88 points, or 0.80 percent, to close at 2,333.29, extending its losing streak to a fourth session.

Trading volume was moderate at 353.63 million shares worth 5.2 trillion won (US$4.02 billion), with decliners outstripping gainers 753 to 133.

Foreigners and institutions sold a combined 130 billion won worth of stocks in net value, exceeding individuals’ stock purchases valued at 105 billion won.

Overnight, the Dow Jones Industrial Average retreated 0.49 percent, and the tech-heavy Nasdaq Composite lost 1.49 percent.

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.

The risk of higher interest rates continues to fuel investor concerns over a U.S. recession in 2023 and reduce the appetite for risky assets, analysts said.

“In today’s session, the Bank of Japan’s unexpected yield curve adjustment affected the market as well,” You Myeong-gan, an analyst at Mirae Asset Financial Group, said.

On Tuesday, the BOJ announced it will raise 10-year government bond yields to around 0.5 percent from the previous upper limit of 0.25 percent. The decision was seen as heralding Japan’s move for monetary tightening.

Large-cap stocks were mixed across the board.

Market bellwether Samsung Electronics Co. fell 1.5 percent to 58,600 won, No. 2 chipmaker SK hynix Inc. declined 0.9 percent to 78,300 won, and top carmaker Hyundai Motor Co. shed 1.3 percent to 157,000 won.

Among gainers, leading tiremaker Hankook Tire & Technology Co. rose 0.3 percent to 33,350 won, leading cosmetics firm AmorePacific Corp. climbed 0.8 percent to 133,000 won, and leading car battery maker LG Energy Solution was up 1.1 percent to 487,500 won.

The Korean won closed at 1,289.60 won against the U.S. dollar, up 13.30 won from the previous session’s close.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 14 basis points at 3.685 percent, and the return on the benchmark five-year government bond climbed 17 basis points to 3.618 percent.

Source: Yonhap News Agency

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