Geopolitical risks, high bond yields sink stocks for third straight day

Shares closed sharply lower for the third consecutive day Monday as investors' risk-off sentiment escalated amid geopolitical uncertainties and high U.S. bond yields. The local currency fell against the dollar.

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,357.02 points on Monday, down 0.76 percent, or 17.98 points, from the previous trading session. [YONHAP]

Shares closed sharply lower for the third consecutive day Monday as investors' risk-off sentiment escalated amid geopolitical uncertainties and high U.S. bond yields. The local currency fell against the dollar.

The Kospi lost 17.98 points, or 0.76 percent, to close at 2,357.02.

Trading volume was slim at 387.7 million shares worth 6.9 trillion won ($5.1 billion), with decliners beating gainers 593 to 283.

“With no specific upward momentum in place, unfavorable circumstances for investors continue, including geopolitical risks and pressure from bond yield levels,” said Lee Kyoung-min, an analyst at Daishin Securities, referring to the ongoing war between Israel and Palestinian militant group Hamas.

On Friday (U.S. time), all three major U.S. indexes plunged as the yield on the 10-year Treasury almost hit the 5 percent mark amid high borrowing costs.

In Seoul, tech and financial stocks led the market decline.

Samsung Electronics dropped 0.58 percent to 68,400 won, and SK hynix retreated 1.74 percent.

Financial shares went south as the outstanding amount increased in the stock market.

KB Financial Group plunged more than 2.8 percent to 55,200 won, Shinhan Financial Group lost 2.36 percent to 35,100 won, and Hana Financial Group slid 2.53 percent to 42,300 won.

IT stocks also ended in negative terrain.

Naver went down more than 1 percent to 178,300 won, and Kakao shot down 2.82 percent to 37,950 won in connection to the alleged involvement of the company's executives in a suspected stock manipulation case.

On the other hand, auto shares were strong, with Hyundai Motor up 1.04 percent to 185,400 won and Kia up 1.59 percent to 83,000 won.

Battery shares were mixed.

LG Energy Solution was flat at 436,500 won, while Posco Future M gained 0.5 percent to 301,500 won. Samsung SDI lost 1.25 percent to 474,000 won.

The local currency ended at 1,353.70 won against the dollar, up 1.3 won from the previous session's close.

Bond prices, which move inversely to yields, closed mixed. The yield on three-year government bonds increased 1.3 basic points to 4.05 percent, and the return on the benchmark U.S. 10-year government bond fell 6.2 basic points to 4.98 percent.

BY KIM JU-YEON, YONHAP [kim.juyeon2@joongang