The U.S. Federal Reserve (Fed) hinted at slowing down the pace of interest rate cuts next year, causing the KOSPI to drop nearly 2%.
As the U.S. Federal Reserve (Fed) hinted at slowing the pace of interest rate cuts, the New York stock market plunged sharply, and the domestic stock market also opened with a significant decline. The KOSPI started the session down 57.88 points (2.33%) at 2426.55, and the KOSDAQ also opened more than 15 points lower. Various indices are displayed in the dealing room at the Hana Bank headquarters in Euljiro, Seoul. Photo by Heo Young-han
On the 19th, the KOSPI closed at 2,435.93, down 48.50 points (1.95%) from the previous day. It fell below the 2,440 level again after seven trading days since the 10th.
Amid the overnight December Federal Open Market Committee (FOMC) meeting in the U.S., the decline is attributed to the Fed's signal to slow the pace of rate cuts and the sharp drop in the U.S. stock market.
In the securities market, foreigners and institutions sold a net 434.1 billion KRW and 507.4 billion KRW respectively, while individuals bought a net 802.6 billion KRW.
Most of the top market capitalization stocks fell. Semiconductor stocks such as Samsung Electronics (-3.28%) and SK Hynix (-4.63%) dropped significantly after U.S. semiconductor company Micron's earnings outlook fell short of market expectations. LG Energy Solution, Samsung Biologics, Hyundai Motor, Celltrion, Kia, NAVER, Shinhan Financial Group, and POSCO Holdings closed down between 1% and 3%. Only HD Hyundai Heavy Industries rose more than 5%.
The KOSDAQ index closed at 684.36, down 13.21 points (1.89%). Institutions and foreigners led the decline by net selling 113.8 billion KRW and 19.9 billion KRW respectively.
Among the top market cap stocks, Rigachem Bio (-7.13%), Samchundang Pharm (-5.00%), Alteogen (-3.54%), and Celltrion Pharm (-3.32%) fell sharply. Pharma Research (2.38%), JYP Ent. (1.69%), and Classys (1.46%) rose.
Ji-won Kim, a researcher at KB Securities, analyzed, "With U.S. inflation forecasts also revised upward and Fed Chair Powell’s hawkish remarks indicating that future rate cuts will be decided more cautiously, the domestic stock market started with a sharp drop of over 2%. The USD/KRW exchange rate surpassed 1,450 for the first time in 15 years since the 2009 financial crisis, exerting strong downward pressure on the index, and foreigners and institutions switched to net selling simultaneously. In particular, the net short position in KOSPI futures exceeded 600 billion KRW."
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