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Sunday, May 26, 2024

Stocks close lower amid worsening Korea-China relations ahead of FOMC

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Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,629.35 points on Monday, down 0.45 percent, or 11.81 points, from the previous trading session. [YONHAP]
Screens in Hana Bank’s trading room in central Seoul show the Kospi closing at 2,629.35 points on Monday, down 0.45 percent, or 11.81 points, from the previous trading session. [YONHAP]

Stocks finished lower Monday on foreign selling, as investors remain keen on the Federal Open Market Committee’s (FOMC) rate-setting meeting this week. The won rose against the dollar.

The benchmark Kospi fell 11.81 points, or 0.45 percent, to close at 2,629.35. It reached a one-year high when the session opened, but lost its gains within the first hour of trading to finish in negative territory.

Trading volume was moderate at 547.41 million shares worth 9.25 trillion won ($7.2 billion), with decliners outpacing gainers 576 to 303.

The Dow Jones Industrial Average rose 0.1 percent to 33,876.78 on Friday, and the tech-heavy Nasdaq Composite climbed 0.2 percent to 13,259.14.

Foreigners and institutions sold a combined 354 billion won worth of stocks, offsetting individuals’ stock purchases valued at 346 billion won.

Analysts expected the U.S. central bank will put its rate hike mode on hold this week as recent economic data shows the U.S. economy is slowing down.

In Seoul, stocks considered China-related consumer goods declined on woes over worsening Korea-China relations.

On Thursday, Chinese Ambassador to Korea Xing Haiming invited the leader of the Democratic Party Lee Jae-myung to his residence in Seoul for dinner and reeled off a 15-minute prepared speech in front of local reporters venting Beijing’s grievances and warning Korea against siding with the United States.

Korea’s Foreign Ministry summoned Xing to the ministry headquarters the next day and “sternly warned” against his “unreasonable and provocative” comments, which was met by the Chinese Foreign Ministry summoning the Korean ambassador to Beijing on Saturday as tensions continue to flare up between the neighboring countries.

LG Household & Health Care shrunk 3.89 percent to 519,000 won, and Amore Pacific shed 3.26 percent to 103,700 won.

Hotel Shilla sank 3.64 percent to 74,100 won, and Shinsegae dipped 1.28 percent to 192,700 won.

Tech and auto stocks led the decline as well.

Samsung Electronics fell 1.4 percent to 71,000 won, and chipmaker SK hynix declined 0.5 percent to 114,800 won.

Hyundai Motor dropped 0.5 percent to 196,200 won, and Kia lost 1.57 percent to 81,600 won.

Among gainers, Hanjin KAL, the parent firm of the national flag carrier Korean Air, rose 2.9 percent to 48,800 won.

Korea’s sole aircraft manufacturer Korea Aerospace Industries climbed 1.5 percent to 53,700 won, and Hanwha Ocean, formerly Daewoo Shipbuilding & Marine Engineering, jumped 3.8 percent to 30,100 won.

The local currency closed at 1,288.3 won against the dollar, down 3.2 won from the previous session’s close.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year government bonds remained flat at 3.490 percent, and the yield on the benchmark 10-year government bonds gained 2.2 basis points to 3.740 percent.

BY DONG-JOO SOHN, YONHAP [sohn.dongjoo@joongang.co.kr]