South Korean shares closed lower on Thursday despite opening at a record high in the day, following the US Federal Reserve's decision to keep the benchmark interest rates unchanged in the range of 3.50% to 3.75%.

This hawkish interpretation of the Federal Open Market Committee (FOMC) took into account the ongoing Middle East conflict and high energy prices, which led to rates being held steady at Jerome Powell's final policy announcement before his term as Fed chief ended on May 15.

In addition, increasing global oil prices also took a toll on investor sentiment, with Brent crude hitting an intraday high of $126.41 per barrel--its highest since June 2022-- while West Texas Intermediate (WTI) briefly surpassed $110.

The Korea Composite Stock Price Index or Kospi fell 92.03 points, or 1.4%, to end at 6,598.87. The Kosdaq also declined by 27.91 points, or 2.3%, to close at 1,192.35.

In economic news, South Korea's overall industrial output increased 0.3% month-on-month in March, decelerating sharply from a 5.3% monthly rise in February, according to data from Statistics Korea released Thursday.

The construction and public administration indices fell by 7.3% and 3.3%, respectively, in March from the prior month, while the index for the service, mining and manufacturing industries added 1.4% and 0.3%, respectively.

Total industrial production increased by 3.6% in March from the same month in 2025, after a 2.3% yearly decline in February.

In corporate news, Hyundai Motor Group, the parent of Hyundai Motor (KRX:005380) and Kia (KRX:000270), entered a multi-year partnership with the Georgia Institute of Technology to jointly develop hydrogen mobility solutions, according to a Thursday release.

The agreement is expected to advance hydrogen-powered transportation, boost applied research, and hasten the use of zero-emissions vehicles in Georgia, it said.

Shares of Hyundai Motor fell nearly 5% at market close, while those of Kia fell over 3%.