[Fed rate hike]
KOSPI rose 1.3% to close at 2694
Japan, China and Hong Kong also rose by 1-7%.
The exchange rate fell by more than 20 won for the first time in two years, and the US Federal Reserve raised the key interest rate for the first time in more than three years and predicted six more hikes this year, but domestic and foreign financial markets all held a “relief rally” all at once.
On the 17th, the KOSPI closed at 2,694.51, up 1.33% from the previous day. Foreigners and institutions led the upward trend, with 463.5 billion won and 250 billion won, respectively. Foreigners who had sold close to 5 trillion won this month turned to net buying after 9 trading days. The KOSDAQ index closed at 914.13, up 2.5%, and recovered to 900 units.
In the Seoul foreign exchange market, the won-dollar exchange rate plunged 21.4 won to close at 1214.3 won. It is the first time in two years since March 27, 2020 that the exchange rate fell by more than 20 won a day. The exchange rate fell 28.5 won for two days up to this day, largely reversing the increase that had continued since the beginning of the month.
On the same day, Asian stock markets such as Japans Nikkei Average, Chinas Shanghai Composite Index, Hong Kongs H Index, and Taiwans Jachuan Index soared all at once.
Although the Federal Reserve has started to raise interest rates in earnest, it is believed that investor sentiment has revived as the market has shown that monetary policy uncertainty has been resolved. Investor sentiment was also stimulated by Fed Chairman Jerome Powells strong confidence in the recovery of the US economy. On top of that, the progress in negotiations between Russia and Ukraine also overlapped with expectations for a ceasefire, alleviating the fear that had weighed on the market.
Kim Ji-san, head of research center at Kiwoom Securities, said, “Even if the Fed raises interest rates further in May, the stock market will not be shaken much. Kim Hak-gyun, head of Shinyoung Securities research center, said, “If the peace negotiations between Russia and Ukraine progress, the stock market could rebound in earnest.”