On a Thursday morning in Seoul, the South Korean stock market drifted lower as a familiar fear returned to the room: the pandemic, now spreading at its fastest pace yet. Investors who had hoped the Federal Reserve's cautiously optimistic minutes might lift spirits found that the news from home carried more weight. It is a reminder that even in a world reaching for recovery, the old rhythm of contagion and restraint still sets the tempo for ordinary lives and the money that follows them.
South Korean Stocks Slip as Record Daily COVID-19 Cases Outweigh Fed Minutes Cheer
A record day of infections outweighed the Fed's reassurance
Mark
So the Fed minutes were supportive, yet Korean stocks still fell. Why did the virus win out?
Mimi
Because it hit at home and on the same day. A record one-day rise in infections, with officials weighing tighter distancing rules, is a direct threat to local activity.
Luke
Careful, though. The report says the record cases "outweighed" the Fed cheer, but that's the wire's read of the market. A 0.40% drop doesn't prove a single cause.
Mark
Fair. What did the Fed minutes actually say?
Mimi
That substantial further progress on recovery had generally not yet been met, but progress was expected to continue, and officials agreed they must be ready to act if inflation or other risks emerge.
Mark
And the foreign selling? 142.0 billion won.
Luke
It's a real figure, but it's one session's net selling, measured in the morning. We don't know the full-day total or whether it signals a trend.
Mimi
The won's move fits that pattern, down 0.54% onshore to 1,144.3 per dollar.
Mark
Why did bond yields fall, then?
Luke
The source doesn't say. Falling yields are consistent with a cautious mood, but that's an inference, not something reported.
Mimi
What we do know is the three-year yield fell 3.0 basis points to 1.380% and the 10-year fell 3.8 to 2.001%.
Luke
And the unknown that matters most: whether the distancing rules are actually tightened. That's only under consideration.
El Pulso
- South Korea logged its highest-ever one-day jump in COVID-19 infections, and the shock landed on trading floors before lunch.
- The KOSPI slipped 0.40% to 3,272.27 after already sliding the day before, with foreign investors pulling 142 billion won out of the main board.
- Officials are weighing tighter social-distancing rules, and every headline about new limits is pressing on shoppers, employers and investors alike.
- The won weakened to about 1,144 per dollar while bond yields fell, a split signal that markets are seeking safety but unsure how far the outbreak will reach.
On a Thursday morning in Seoul, the South Korean stock market drifted lower as a familiar fear returned to the room: the pandemic, now spreading at its fastest pace yet. Investors who had hoped the Federal Reserve's cautiously optimistic minutes might lift spirits found that the news from home carried more weight. It is a reminder that even in a world reaching for recovery, the old rhythm of contagion and restraint still sets the tempo for ordinary lives and the money that follows them.
On Thursday, July 8, 2021, Seoul's benchmark KOSPI index slipped 13 points, or 0.40%, to 3,272.27 by mid-morning, extending the previous day's slide. The cause was close to home: South Korea had recorded its highest-ever one-day rise in COVID-19 infections, and officials were considering stricter social-distancing rules. For investors, the threat of new limits on daily life and business weighed more heavily than any relief.
There was a small comfort from across the Pacific. Minutes from the U.S. Federal Reserve's June meeting showed officials believed the economy still had not met the threshold for substantial further progress, though they expected recovery to continue and stood ready to act if risks emerged. The cheer was real but not enough to offset the domestic numbers.
The market's heavyweights told mixed stories. Samsung Electronics eased 0.25%, chip rival SK Hynix fell 1.21%, and LG Chem dropped 1.49%, while internet company Naver rose 2.16%. Foreign investors were net sellers of about 142 billion won on the main board.
The won weakened to 1,144.3 per dollar onshore, down 0.54%, while bond prices rose and yields fell, with the 10-year benchmark dropping to 2.001%. Everything now hangs on the outbreak. Whether tighter restrictions arrive, and how the currency and bonds respond, will reveal how deeply the virus is shaping investor nerves.
By mid-morning in Seoul on Thursday, July 8, 2021, the benchmark KOSPI index had slipped 13.07 points, or 0.40%, to 3,272.27, as of 0207 GMT. The drop came on top of Wednesday's 0.60% slide, which was the sharpest one-day decline in more than two weeks.
The reason was close to home. South Korea reported its highest-ever one-day increase in COVID-19 infections that day, and officials said they were considering tightening social-distancing restrictions further. For investors, the prospect of new limits on daily life and business outweighed what might otherwise have been a calmer session.
There was good news to lean on from abroad. The U.S. Federal Reserve had released minutes from its June meeting, and markets took some cheer from them. The minutes showed that officials saw substantial further progress on economic recovery as "generally seen as not having yet been met." Participants still expected progress to continue, and they agreed the central bank must be ready to act if inflation or other risks materialize. That was not enough to offset the domestic virus numbers.
Among the market heavyweights, the picture was mixed. Samsung Electronics fell 0.25% and its chip-sector peer SK Hynix dropped 1.21%. LG Chem declined 1.49%. Internet company Naver went the other way, rising 2.16%.
Foreign investors were net sellers on the main board, offloading 142.0 billion won worth of shares, about $124.12 million.
The won also lost ground. On the onshore settlement platform it was quoted at 1,144.3 per dollar, down 0.54%. In offshore trading it stood at 1,144.1 per dollar, down 0.2%, and the one-month non-deliverable forward contract was quoted at 1,144.0.
Bond markets moved the other direction, with prices up and yields down. September futures on three-year treasury bonds rose 0.13 point to 110.32. The most liquid three-year Korean treasury bond yield fell 3.0 basis points to 1.380%, while the benchmark 10-year yield fell 3.8 basis points to 2.001%.
What comes next depends largely on the outbreak. Whether the government follows through on tighter social-distancing rules, and how the won and bond yields respond, will show how heavily the virus is weighing on sentiment.
Citas Notables
Substantial further progress on economic recovery was generally seen as not having yet been met.— Fed officials, June meeting minutes
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