Seoul: Seoul stocks shot up by more than 2 percent Tuesday, extending their winning streak to a fourth day on optimism over a U.S.-Iran deal to end the conflict and reopen the Strait of Hormuz. The local currency weakened against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) added 180.62 points, or 2.11 percent, to close at 8,726.6. Overnight, U.S. stocks rallied after U.S. President Donald Trump announced that a preliminary agreement to end the conflict with Iran had already been signed and the Strait of Hormuz would be "completely opened" on Friday.
The S and P 500 rose 1.7 percent, while the tech-heavy Nasdaq 100 gained 3.1 percent, and the Dow Jones Industrial Average reached a record high. Oil prices saw a retreat, with Brent crude falling 4.76 percent to US$83.17 per barrel and U.S. WTI dropping 4.87 percent to $80.75 per barrel, easing inflation concerns.
Trade volume was moderate at 582.36 million shares worth 39.42 trillion won (US$26.08 billion), with winners outnumbering losers 518 to 359. Foreigners and institutions bought a net 1.54 trillion won and 703.53 billion won, respectively, while individual investors sold a net 2.18 trillion won.
"Foreign investors drove gains in the local stock market as easing geopolitical tensions following the U.S.-Iran deal and falling oil prices strengthened risk appetite," noted Lee Kyoung-min, an analyst at Daishin Securities. "The strong performance of U.S. tech stocks also supported sentiment in South Korea's semiconductor sector." Tech shares posted gains across the board.
Market bellwether Samsung Electronics increased 1.78 percent to 343,000 won, while industry rival SK hynix gained 4.11 percent to 1,382,000 won. Artificial intelligence investment firm SK Square surged 6.23 percent to 1,501,000 won. Defense stocks also traded higher, with industry leader Hanwha Aerospace advancing 9.13 percent to 1,183,000 won, and smaller rival LIG D and A jumping 18.85 percent to 1,002,000 won after announcing a partnership with German defense firm Rheinmetall to cooperate in air defense systems.
Daewoo Engineering and Construction soared 19.87 percent to 27,450 won on expectations of new business opportunities in the Middle East amid eased geopolitical tensions. The Korean won was quoted at 1,511.6 won against the U.S. dollar, down 0.5 won from the previous session.
Bond prices, which move inversely to yields, closed higher. The yield on three-year Treasurys fell 2.7 basis points to 3.717 percent, and the return on the benchmark five-year government bonds shed 1.2 basis points to 3.905 percent.