Stocks drop more than 1 percent after Wall Street plunge

Shares dropped by more than 1 percent to snap a two-day winning streak, as investor appetite for risky assets fell amid fears about high-flying inflation that sparked a massive sell-off on Wall Street. The won fell against the dollar.

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,592.34 points on Thursday, down 33.64 points, or 1.28 percent, from the previous trading day. [YONHAP]

Shares dropped by more than 1 percent to snap a two-day winning streak, as investor appetite for risky assets fell amid fears about high-flying inflation that sparked a massive sell-off on Wall Street. The won fell against the dollar.

The Kospi retreated 33.64 points, or 1.28 percent, to close at 2,592.34 points.

Trading volume was moderate at about 663 million shares worth some 9.7 trillion won ($7.6 billion), with losers outnumbering gainers 767 to 124.

Institutions sold a net 483.4 billion won, and foreigners offloaded 97.9 billion won, while retail investors bought 520.2 billion won.

The key stock index faltered below the 2,600-point mark at the opening bell, tracking an overnight plunge on Wall Street.

The S&P 500 sank 4.04 percent Thursday, the sharpest drop since June 2020, as high inflation and lackluster earnings by giant retailers stoked concerns about a possible recession.

The Dow Jones Industrial Average plummeted 3.57 percent, and the Nasdaq composite tumbled 4.73 percent.

Investors are worried high prices and monetary tightening around the world may lead to a recession.

"The high inflation pressure increased corporate expenses, leading to disappointing earnings by retailers and fears about recession. The earning shock by Target and Walmart sparked an overall fall in retail goods and clothing stocks," the Shinhan Investment analyst team said in a report.

Most stocks closed lower in Seoul.

Samsung Electronics lost 0.88 percent to 67,500 won, LG Chem shed 1.95 percent to 502,000 won and Naver retreated 1.81 percent to 271,500 won.

Hyundai Motor dropped 1.89 percent to 182,000 won and SK hynix declined 2.2 percent to 111,000 won.

The local currency closed at 1,277.7 won against the dollar, up 11.1 won from the previous session's close.

The Kosdaq declined 7.77 points, or 0.89 percent, to close at 863.80 points.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds fell 2.6 basis points to 3.046 percent, and the yield on the benchmark 10-year government bond dropped 9.7 basis points to 2.89 percent.

BY CHO JUNG-WOO, YONHAP [cho.jungwoo1@joongang.co.kr]