[Asia Economy Reporter Junho Hwang] On the 24th, South Korea's stock market opened higher as the Chairman of the U.S. Federal Reserve (Fed), the country's central bank, once again stated that the low interest rate policy would continue. However, the market has turned downward and continued trading, unable to overcome concerns about rising bond yields.
On the 24th, the KOSPI opened at 3,070.58, up 0.49 points from the previous closing price, but soon declined. As of 9:10 a.m., the KOSPI was at 3,058.65, down 11.44 points, or 0.37%, from the previous close. Individual investors showed a net selling intention of 198.9 billion KRW, while foreigners and institutions showed net selling intentions of 170.8 billion KRW and 24.3 billion KRW, respectively.
The continued selling by foreigners appears to be due to rising bond yields. When interest rates rise, the appeal of safe assets like bonds increases compared to more volatile stocks. Despite Fed Chairman Jerome Powell's dovish remarks, this is acting as a selling factor.
However, the previous day, the U.S. 10-year bond yield fell by 1.5 basis points to 1.35% following Powell's positive remarks, while the 2-year yield remained unchanged at 0.1108%.
Chairman Powell indicated that it would take time to achieve the Fed's goals, which are full employment and sustained inflation at around 2%. He reaffirmed the continuation of the low interest rate policy. Regarding asset purchases, he mentioned that the Fed would proactively communicate sufficiently in advance. He stated that inflationary pressures due to economic reopening would persist but would not be significant, and inflation is not expected to rise to problematic levels. However, considering base effects, inflation may temporarily increase. He also said that the GDP growth forecast for this year would be revised to around 6% (currently forecasted at 4.2%).
Among KOSPI sectors, Medical Precision, Financials, Non-metallic Minerals, and Telecommunications are showing upward trends, while other sectors are declining. Among the top market capitalization stocks, LG Chem is showing an upward trend, while others are slightly down.
The KOSDAQ opened 0.20 points higher at 936.80 (0.02%↑) but, like the KOSPI, is recording a downward trend. As of 9:10 a.m., it was down 0.31 points to 936.29, a 0.003% decrease from the previous day. Individual investors showed a net buying intention of 45.6 billion KRW, while foreigners and institutions showed net selling intentions of 15.5 billion KRW and 27.5 billion KRW, respectively.
By sector, Computer Services is showing gains of over 1%. Telecommunications Services, Other Manufacturing, Digital, Medical Precision, Internet, Pharmaceuticals, Entertainment, Distribution, Textile & Apparel, and Broadcasting Services are also rising. Among the top market capitalization stocks, biotech stocks are rising, including Celltrion Health, Celltrion Pharm, and Seegene.
Meanwhile, economic indicators released the previous day supported signs of economic recovery. The U.S. Conference Board Consumer Confidence Index for February was announced at 91.3, exceeding the expected 90.0 and up from the previous 88.9. The U.S. December FHFA House Price Index (month-over-month) was 1.1%, above the expected 1.0% and previous 1.0%. Eurozone January Consumer Price Index (month-over-month) was 0.2%, slightly below the expected 0.25% and previous 0.3%.
On this day, the USD-KRW exchange rate opened at 1,109.90 KRW, down 0.70 KRW from the previous day.
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