The U.S. Federal Reserve raised its benchmark interest rate for the first time in over three years and hinted at the possibility of further increases this year, yet the KOSPI index closed with minimal change. After starting the day nearly 1% higher, the index surrendered its gains due to continued selling by foreign investors. Despite the Fed's hawkish monetary policy, the market showed limited reaction.
On September 17, the Korea Exchange reported that the KOSPI closed at 6,715.41, down 2.56 points (0.04%) from the previous trading day. The index opened at 6,779.02, up 61.05 points (0.91%), fluctuating around the 6,770 mark before reversing its gains as the session ended.
Leading semiconductor stocks that initially drove the early gains also gave back their increases. Samsung Electronics fell by 0.39%, while SK Hynix dropped 0.80%. In the securities market, individual and institutional investors bought a net 483.3 billion won and 227.2 billion won, respectively, while foreign investors sold a net 2.4153 trillion won.
Fed Chair Kevin Warsh's hawkish comments raised concerns about tightening, but some analysts noted that much of this apprehension had already been priced in. Lee Kyung-min, a researcher at Daishin Securities, stated, "Since the possibility of a rate hike was largely anticipated, the market's reaction was limited, and the easing of international oil price increases has led to relatively favorable investor sentiment."
Earlier, U.S. markets fell amid growing caution over the Fed's rate hike and potential further tightening. The Dow Jones Industrial Average dropped 1.21%, while the S&P 500 fell 0.45%. The tech-heavy Nasdaq Composite ended down 0.01%.
During the Federal Open Market Committee (FOMC) meeting, the Fed decided to raise the benchmark interest rate by 0.25 percentage points to a range of 3.75% to 4.00%. This marks the first rate increase in approximately three years and two months. With the Fed leaving the door open for additional rate hikes this year, concerns about the intensity of future tightening have increased. U.S. Treasury yields also rose, with the benchmark 10-year Treasury yield surpassing 5% during the session.
Given the FOMC's unexpectedly hawkish stance, there are concerns that market interpretations may diverge, leading to increased volatility in the short term. However, analysts believe that the focus should be on the future intensity of tightening and corporate earnings rather than the rate hike itself.
Han Ji-young, a researcher at Kiwoom Securities, noted, "While short-term rates have risen following the FOMC, the increase in long-term rates, such as the 10-year yield, has been limited. It is more appropriate to weigh the direction of the 10-year yield and international oil prices rather than the additional 25 basis point hike itself."
He added, "Since 1994, there have been six periods of Fed rate hikes, and during these periods, the average return of the KOSPI has been 9.1%. The consensus for KOSPI's operating profit in 2026 is expected to be around 990 trillion won, which is a reassuring factor."
Lee Kyung-min also mentioned, "While we should consider the KOSPI's support around the 6,600 level as we digest the hawkish FOMC, this could be an opportunity to prepare for the upcoming earnings season after addressing the concerns over the hawkish monetary policy. In the short term, we need to be ready for movements in the mid-7,000s, and in the long term, towards the high 8,000s, aiming for historical peaks."
* This article has been translated by AI.
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