Seoul shares open lower as rising US Treasury yields and oil prices weigh
Key Takeaways
- •The benchmark Korea Composite Stock Price Index opened lower and was down 0.31 percent at 6,831.53 at 9:15 a.m.
- •U.S. Treasury yields rose again after the Treasury announced an expanded bond buyback plan, but investors remained skeptical about its lasting effect.
- •The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all fell overnight on Wall Street.
- •Brent crude rose more than 2 percent amid renewed U.S.-Iran tensions, adding pressure to South Korean equities.
- •Samsung Electronics and SK hynix advanced, while LG Energy Solution and Hyundai Motor declined.
South Korean stocks opened lower Friday, following overnight declines on Wall Street as US Treasury yields climbed again and higher oil prices weighed on investor sentiment.
The benchmark Korea Composite Stock Price Index opened 1.35 percent lower before trimming its losses. As of 9:15 a.m., the index was down 21.05 points, or 0.31 percent, at 6,831.53.
US Treasury yields resumed their upward trend Thursday, reversing much of the previous day's decline. The rebound came after the US Treasury announced an expanded bond buyback plan, but investors grew skeptical that the expanded buybacks would provide more than temporary relief from rising long-term borrowing costs. Higher long-term US yields tend to pressure equities worldwide by making safer fixed-income assets more attractive and raising financing costs, a dynamic that often spills over into export-driven Asian markets such as South Korea's.
On Wall Street, the Dow Jones Industrial Average shed 1.32 percent overnight, while the S&P 500 slipped 0.87 percent. The tech-heavy Nasdaq Composite Index fell 1 percent.
Higher oil prices added to the downward pressure on equities, with Brent crude rising more than 2 percent amid renewed tensions between the United States and Iran. South Korea imports nearly all of its crude oil, so sustained increases in energy prices tend to feed through to costs for local refiners, petrochemical producers and airlines, and can weigh on the country's trade balance.
In Seoul, most shares traded lower, though major chipmakers bucked the trend on continued expectations for shareholder returns. Market bellwether Samsung Electronics climbed 0.65 percent, while chipmaking rival SK hynix rose 1.83 percent, extending its rally after announcing a share buyback program Wednesday. Semiconductors are South Korea's largest export item, and the two chipmakers rank among the heaviest weights on the index, giving their share moves outsized influence on the KOSPI.
Battery manufacturer LG Energy Solution shed 2.65 percent, and leading automaker Hyundai Motor fell 1.2 percent.
The Korean won was trading at 1,391.4 won against the US dollar as of 9:15 a.m., up 4.6 won from the previous stock market session's close. (Yonhap)
