Global Market: South Korea stocks erase gains as Kospi eyes steepest quarterly fall since 2020

South Korean shares reversed early gains to trade lower on Wednesday as elevated bond yields weighed on investor sentiment, putting the benchmark KOSPI on track for its biggest quarterly decline in six-and-a-half years, according to a report by Reuters.

The Kospi was down 3.01 points, or 0.04%, at 6,867.80 as of 0253 GMT, after rising as much as 1.4% earlier in the session.

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The index has fallen about 19% so far this quarter, ending a six-quarter winning streak and heading for its steepest quarterly decline since the first quarter of 2020.

Wall Street stocks ended slightly lower on Tuesday as government bond yields continued to climb ahead of key inflation and labour market data. Investors were also assessing comments from Federal Reserve officials for clues on the future path of US interest rates, the report stated.

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South Korea's finance minister said authorities were closely monitoring domestic bond markets and would take measures to stabilise markets if yields rose excessively.

Adding to concerns over the economy, South Korea's factory output unexpectedly declined in August, data showed.

Among major stocks, Samsung Electronics fell 1.01%, giving up its early gains, while rival chipmaker SK Hynix rose 1.19% after advancing more than 3% earlier in the session.

Battery maker LG Energy Solution gained 0.99%, while Hyundai Motor and Kia Corp declined 0.86% and 1.38%, respectively.

Steelmaker POSCO Holdings added 0.33%, while Samsung BioLogics rose 1.08%.

Of the 911 stocks traded on the South Korean exchange, 406 advanced and 453 declined. Foreign investors were net sellers, offloading shares worth 519.1 billion won ($382.99 million).

The South Korean won was quoted at 1,354.2 per dollar on the onshore settlement platform, compared with 1,354.0 in the previous session.

In the bond market, December futures on three-year Treasury bonds rose 0.16 point to 102.35.

The yield on the most liquid three-year South Korean Treasury bond fell 5.1 basis points to 4.021%, while the benchmark 10-year yield declined 4.6 basis points to 4.424%.

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