Seoul: South Korean stocks saw a nearly 1 percent surge Thursday, driven by investor optimism regarding ongoing trade discussions between the United States and Japan. The local currency also strengthened, reaching a more than four-month high against the U.S. dollar.
According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (KOSPI) gained 22.98 points, or 0.94 percent, closing at 2,470.41. This marks a recovery from a 1.21 percent decline experienced the previous day. The trade volume was moderate, with 589.6 million shares traded, valued at 6.5 trillion won (US$4.58 billion). The market saw 638 winners against 225 losers.
Institutional investors were net buyers, acquiring 346.2 billion won worth of stocks. In contrast, foreign and retail investors were net sellers, offloading 351.9 billion won and 87.4 billion won worth of stocks, respectively.
Overnight developments included U.S. President Donald Trump's announcement of "big progress" in the U.S.-Japan trade talks, which aim to prevent Japan from facing higher tariffs. These discussions are expected to influence forthcoming negotiations with other allies, including South Korea.
Despite optimism from the trade talks, Wall Street faced declines after Federal Reserve Chair Jerome Powell cautioned that higher-than-expected tariffs could result in increased inflation and slower economic growth. Powell's comments dampened hopes for a potential rate cut.
Meanwhile, the Bank of Korea chose to maintain the key interest rate at 2.75 percent, citing concerns over fluctuating foreign exchange rates and increasing household debts amid ongoing uncertainties from U.S. tariff policies.
Lee Jae-won, an analyst at Shinhan Securities, noted that while Powell's remarks had a negative impact, the progress in tariff negotiations with Japan provided a boost to the Korean market.
Semiconductor stocks led the gains in Seoul, recovering from a sharp decline the previous day due to the recent U.S. export ban on Nvidia's H20 chips to China. Samsung Electronics rose 0.73 percent to 55,100 won, while SK hynix increased 0.57 percent to 175,000 won.
Food companies and cosmetics makers also performed well, with CJ Cheiljedang rising 2.53 percent to 243,500 won, and AmorePacific jumping 3.77 percent to 115,700 won.
Carmakers and battery companies had mixed results. Hyundai Motor remained unchanged at 181,700 won, while Kia advanced 0.35 percent to 85,000 won. LG Energy Solution saw a slight drop of 0.15 percent to 342,500 won, whereas Samsung SDI increased 2.2 percent to 180,900 won.
The local currency was quoted at 1,418.9 won against the U.S. dollar at 3:30 p.m., an increase of 7.8 won from the previous session, marking the lowest won-dollar rate since December 5 when it was quoted at 1,415.1 won.
Bond prices, which move inversely to yields, closed lower with the yield on three-year Treasurys increasing 3.4 basis points to 2.385 percent, and the return on five-year government bonds rising by 2 basis points to 2.483 percent.