Stock market drops 4 percent on newest U.S.-Iran hostilities as won gains

Shares tumbled 4 percent Wednesday as renewed hostilities between the United States and Iran pushed up crude prices and fueled inflation worries.

The benchmark Kospi closed at 6,562.72, down 273.08 points, or 3.99 percent, ending a two-session winning streak.

Overnight, the United States launched a new round of airstrikes against Iranian targets around the Strait of Hormuz, driving oil prices higher and once again fanning inflation worries.

With higher odds of a rate hike at the Federal Reserve's meeting later this month, all three major U.S. stock indexes finished lower, and the benchmark 10-year U.S. Treasury yield rose to its highest point since January last year.

Trade volume was light at 321.2 million shares worth 18.6 trillion won ($13.6 billion), with losers far outnumbering winners 734 to 137.

Foreign and institutional investors dumped a net 1.9 trillion won and 2 trillion won of shares, respectively, while individuals bought a net 2.3 trillion won.

“The Kospi went bearish as investor sentiment was dragged down by rising oil prices and sovereign debt yields in major economies,” said Lee Kyung-min, an analyst from Daishin Securities.

Samsung Electronics fell 4.02 percent to 250,500 won and SK hynix tumbled 4.73 percent to 1.61 million won.

Hyundai Motor sank 5.62 percent to 378,000 won while Kia slumped 5.18 percent to 124,400 won.

Battery makers also had weak showings as industry leader LG Energy Solution decreased 5.31 percent to 347,500 won and Posco Future M plunged 8 percent to 176,000 won.

Naver skidded 2.79 percent to 209,000 won and Kakao dipped 3.84 percent to 35,100 won.

The local currency strengthened by 1.7 won from the previous session to trade at 1,368.7 won against the dollar as of 3:30 p.m.

Yonhap