Seoul shares seen to stay rangebound in post-holiday sessions

Seoul shares seen to stay rangebound in post-holiday sessions

South Korean stocks are expected to move sideways during the holiday-shortened week on signs of a slowing Chinese economy and fluctuating oil prices, though falling odds of a Federal Reserve rate hike could ease downward pressure, analysts said Saturday.

The benchmark Korea Composite Stock Price Index (KOSPI) closed at 1,917.79 on Friday, down 0.36 percent from a week ago.

The index got off to a strong start after Japan decided to adopt a negative interest rate to shore up the flagging economy, but weak domestic exports and China’s dull manufacturing activity data limited the gains.

Falling oil prices weighed down the index early in the week, but a sharp rebound in crude prices on Wednesday fueled risk-averse sentiments among investors.

Energy and construction shares outperformed the broader market on the back of rebounding oil prices. Auto shares lost after the local currency strengthened against the dollar on rising speculation of the slowing pace of rate hikes.

Analysts expected the stock market to move in a tight range in the coming week amid lingering concerns over fluctuating oil prices, which could affect the nation’s major exporters.

The Seoul bourse will be closed during the Lunar New Year’s holiday that runs through Wednesday.

“As chances of a Federal Reserve rate rise in March are fading, global equities face less downside risk in the coming week,” said Ko Seung-hee, an analyst at Daewoo Securities.

“Despite quantitative easing measures by major economies, however, equities have a lack of growth momentum on concerns over the economic slowdown in China and the United States.”

Investors will await comments from Federal Reserve Chair Janet Yellen’s speech at the House Financial Services Committee in Washington on Wednesday to get clues on the bank’s rate policy.

China is set to announce its foreign currency reserves on Sunday, and Europe’s fourth-quarter gross domestic product is slated for Friday.

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