Powell's 'Hawkish' Remarks Trigger Sharp Early Drop in Domestic Stock Market... KOSPI Falls 2%
[Asia Economy Reporter Lee Jung-yoon] The domestic stock market sharply declined due to the impact of the 'hawkish' remarks by Jerome Powell, Chairman of the U.S. Federal Reserve (Fed).
As of 9:16 a.m. on the 29th, the KOSPI index stood at 2,424.29, down 56.74 points (2.29%) from the previous close. The index opened at 2,432.06, down 48.97 points (1.97%) from the previous session, and has been extending its losses since. Individuals and institutions sold approximately 700 million KRW and 19.1 billion KRW worth of stocks respectively, while foreigners net bought about 21.2 billion KRW.
At the same time, the KOSDAQ index also fell sharply. It was recorded at 780.02, down 22.43 points (2.80%) from the previous trading day. The KOSDAQ opened at 780.48, down 21.97 points (2.74%). Individuals and institutions net sold about 33.8 billion KRW and 14.8 billion KRW respectively, while foreigners net bought stocks worth approximately 51.9 billion KRW.
On this day, the domestic stock market showed a downward trend as Chairman Powell reaffirmed the tightening stance in his speech at the Jackson Hole meeting. Powell stated, "We must maintain a restrictive stance for the time being," and added, "Unfortunately, reducing inflation comes with costs." He also warned strongly against premature easing policies, citing historical examples.
Following Powell's speech, the U.S. stock market also fell more than 3%. On the 26th (local time), the tech-heavy Nasdaq index closed down 497.55 points (3.94%) at 12,141.71. The Dow Jones Industrial Average dropped 1,008.38 points (3.03%) to 32,283.40, and the large-cap S&P 500 index fell 141.46 points (3.37%) to 4,057.66.
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Seo Jung-hoon, a researcher at Samsung Securities, said, "Short-term volatility in the domestic stock market is expected to be inevitable," but added, "However, it is important to note that Chairman Powell's message is not different from the communication style that Fed officials have been using over the past month."
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