KOSPI Closes Slightly Lower Amid Fed's Hawkish Rate Hike; KOSDAQ Gains

The KOSPI fluctuated and closed slightly lower on the 17th after the U.S. Federal Reserve (Fed) raised its benchmark interest rate overnight and signaled additional hikes.

While heavy selling by foreign investors amid a soaring won-dollar exchange rate exerted downward pressure, fierce supply-and-demand battles unfolded as retail and institutional investors countered with buying.

On this day, the KOSPI finished down 2.56 points, or 0.04%, at 6,715.41 compared to the previous session.

The previous day, the KOSPI rebounded for the first time in five trading days driven by the strength of semiconductor stocks, but turned downward just a day later.

Assessments suggest the market held up relatively well despite the adverse factor of the Fed's hawkish rate hike.

The index opened up 61.05 points, or 0.91%, at 6,779.02 and briefly expanded its gains to 6,795.53 (1.15%).

However, it subsequently narrowed its gains, fluctuated back and forth, and turned downward in the late session.

It even slipped to as low as 6,697.85 (-0.30%).

As of 3:30 p.m. on this day, the won-to-dollar exchange rate in the Seoul foreign exchange market stood at 1,382.2 won, up 13.6 won from the previous session.

This is the first time in three weeks since August 27 (1,380.9 won) that the closing price at 3:30 p.m. surpassed the 1,380 won range.

In the KOSPI market, foreign investors net sold 2.2803 trillion won, marking a selling streak for the seventh consecutive trading day.

Meanwhile, retail and institutional investors net bought 413.7 billion won and 158.6 billion won, respectively, while other corporations also maintained a buyer-upped stance of 1.7047 trillion won.

Foreign investors, however, net bought 203.4 billion won in the KOSPI 200 futures market.

Domestic stock markets on this day showed a wait-and-see stance with mixed upward and downward factors.

The fact that all three major New York stock indices fell overnight due to the Fed's rate hike and hawkish message exerted downward pressure on the stock market.

Earlier overnight, the U.S. Fed raised its benchmark interest rate by 0.25 percentage points to 3.75–4.00% at the Federal Open Market Committee (FOMC) meeting.

This marks the first tightening measure in three years and two months since July 2023.

It also signaled the possibility of additional hikes within the year.

In the economic outlook data, the median average of year-end rate expectations among 18 out of 19 FOMC members stood at 4.1%, which is 0.3 percentage points higher than in June.

Fed Chair Kevin Warsh emphasized the Fed's commitment to price stability during a press conference, stating, "Inflation has been too high and has persisted for too long."

The market interpreted this as a hawkish (monetary tightening-preferring) remark, and investor sentiment in the stock market shrank.

The 10-year U.S. Treasury yield, a global benchmark for interest rates, stood at 5.024%, up 2.2 bps (1 bp = 0.01 percentage point) from the previous session.

However, the fact that the stock market had already largely priced in concerns over the Fed's rate hike, coupled with spreading perceptions that uncertainties regarding the future rate path have been resolved, acted as an upward factor for the market.

The turnaround of international oil prices—which had surged for two consecutive days—into a downward trend amid news of Saudi Arabia's roundabout oil supply also appears to have stimulated bargain-hunting sentiment.

Lee Kyung-min, an analyst at Daishin Securities, explained, "Since the possibility of a rate hike was already largely priced into the domestic stock market, the impact on the market was limited," adding, "As the upward trend in international oil prices also stabilized, investment sentiment is showing a relatively favorable trend."

Among top market-cap stocks, major semiconductor shares such as Samsung Electronics (-0.39%) and SK Hynix (-0.80%) declined, exerting downward pressure on the index.

In contrast, the KOSDAQ index finished up 6.20 points, or 0.76%, at 822.18, extending its winning streak for the third consecutive trading day.

The KOSDAQ index opened up 4.18 points, or 0.51%, at 820.16, then narrowed its gains during the session and briefly turned downward.

It then returned to an upward trend and once climbed up to 826.22 (1.25%).

Institutional investors net bought 448 billion won, while retail and foreign investors showed a selling dominance of 25.1 billion won and 33.4 billion won, respectively.

Trading values for the KOSPI and KOSDAQ markets on this day were tallied at 15.541 trillion won and 5.622 trillion won, respectively.

The pre-market and main market trading values of the alternative trading system Nextrade totaled 6.82 trillion won.
※ Please note: This article was translated by AI and may contain errors.