South Korean stocks jump on expectations of deeper Fed rate cut

SEOUL: Round-up of South Korean financial markets:

** South Korean shares jumped about 1.5% on Friday as dovish comments from a top Federal Reserve official fuelled expectations of a sharp U.S. rate cut later this month, while escalating tensions between Seoul and Tokyo had a limited impact. The won strengthened, while the benchmark bond yield fell.

** Policymakers need to add stimulus early to deal with too-low inflation when interest rates are near zero and cannot wait for economic disaster to unfold, New York Fed President John Williams said on Thursday.

** The comments made it a virtual certainty that the Fed would opt to cut interest rates by 25 basis points (bps) at its July 30-31 policy meeting and also fuelled expectations of an even deeper 50 bp reduction.

** A deeper rate cut by the Fed would weaken the dollar, providing a short-term momentum to South Korean stocks, said Ryoo Yong-seok, an analyst at KB Securities. Trade tensions between South Korea and Japan did not affect much, he added.

** The Seoul stock market's main KOSPI index closed 27.80 points, or 1.35% higher at 2,094.35 points, posting its biggest daily percentage gain since late April. For the week, the benchmark index gained 0.37%.

** Japanese Foreign Minister Taro Kono summoned and admonished South Korea's ambassador in a deepening diplomatic row over compensation for Korean wartime forced labour that threatens global supply of memory chips and display screens.

** Foreigners were net buyers of 130.1 billion won ($110.79 million) worth of shares on the main board.      ** The won was quoted at 1,174.5 per dollar on the onshore settlement platform, 0.37% higher than its previous close at 1,178.8. From a week ago, the currency climbed 0.4% against the dollar.

** In offshore trading, the won was quoted at 1,173.5 per U.S. dollar, down 0.1% from the previous day, while in non-deliverable forward trading its one-month contract  was quoted at 1,173.1 per dollar.

** MSCI's broadest index of Asia-Pacific shares outside Japan  was up 0.95%, after U.S. stocks gained . Japanese stocks rose 2.00%.

** The KOSPI has risen 2.61% so far this year, but lost 0.1% in the previous 30 trading sessions.

** The current price-to-earnings ratio is 12.10, the dividend yield is 1.28% and the market capitalisation is 1,242.04 trillion won.

** The trading volume during the session on the KOSPI index  was 386.10 million shares and, of the total traded issues of 895, the number of advancing shares was 660.

** The won has lost 5.0% against the U.S dollar so far this year.

** In money and debt markets, September futures on three-year treasury bonds rose 0.07 points to 110.81, while the 3-month Certificate of Deposit rate was quoted at 1.60%.

** The most liquid 3-year Korean treasury bond yield fell by 1.1 basis points to 1.331%, while the benchmark 10-year yield declined by 1.5 basis points to 1.455%.