Seoul stocks drop over 1% amid disappointment over prospects for U.S. rate cuts

South Korean stocks slipped over 1% as fears of a prolonged high-rate policy by the U.S. Federal Reserve rattled investors. Tech giant Samsung Electronics saw a 2.3% dip following reports of chip testing failures.

South Korean stocks saw a decline of over 1% late Friday morning, driven by investor apprehension over the U.S. Federal Reserve’s potential decision to maintain high interest rates in response to robust economic data. The benchmark Korea Composite Stock Price Index (KOSPI) fell by 29.22 points, or 1.07%, to 2,692.59 as of 11:20 a.m.

Investor sentiment took a hit following a series of U.S. economic reports on Thursday, which indicated persistent inflationary pressures in May. These reports raised concerns that the Federal Reserve might delay rate cuts, further dampening market enthusiasm.

In Seoul’s trading scene, tech giant Samsung Electronics faced a notable downturn of 2.3% following reports from foreign media that its latest high-bandwidth memory (HBM) chips failed to meet standards set by U.S. artificial intelligence chip leader Nvidia.

Meanwhile, LG Energy Solution, a prominent battery manufacturer, saw a decline of 1.1%, while its counterparts Samsung SDI and POSCO Future M experienced drops of 0.86% and 1.91%, respectively.

Major automaker Hyundai recorded a decrease of 1.29%, alongside its auto parts-making affiliate Hyundai Mobis, which slid 1.98%.

In the technology sector, Naver, a leading internet portal operator, witnessed a decrease of 1.26%, while Kakao, the operator of South Korea’s primary mobile messenger, saw a decline of 2.09%.

Despite the overall downward trend, SK Hynix remained unchanged due to the ongoing rally of U.S. chip giant Nvidia. On the other hand, chemical producer LG Chem experienced a notable increase of 1.52%.

The local currency, the won, was trading at 1,370.00 against the U.S. dollar, marking a decrease of 7.6 won from the previous session’s close.

As uncertainties loom over the Federal Reserve’s monetary policy decisions and their impact on global markets, investors are closely monitoring economic indicators and corporate developments for insights into future market movements.