Stocks recover from 20-month low amid cautious optimism

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,334.27 points on Wednesday, up 42.26 points, or 1.84 percent, from the previous trading day. [NEWS1]

Stocks bounced back Thursday from the previous day's 20-month low as the U.S. Federal Reserve's minutes indicated cautious optimism over the economy's long-term prospects, despite impeding rate hikes. The won gained ground against the dollar.

The Kospi rose 42.26 points, or 1.84 percent, to close at 2,334.27. Trading volume was moderate at 333 million shares worth 7.54 trillion won ($5.89 billion) with gainers outstripping decliners 726 to 152.

"The Fed expressed optimism about the economy and anticipated that it's on track for moderate second-quarter growth, easing recession worries," said Seo Sang-young, an analyst at Mirae Asset Securities.

The Fed minutes of its June policy meeting, released Wednesday, showed that the Fed needs to raise the interest rate by another 0.5-0.75 percentage points this month, and an even larger rate hike could be necessary if inflation persists.

The Fed officials noted that a sharp rate hike is still appropriate even if it means it would slow the economy and showed optimism about the economy in the long-term, although they lowered the GDP forecast to 1.7 percent for 2022 from the earlier estimate of 2.8 percent.

In Seoul, blue-chip tech stocks led Kospi's gain.

Samsung Electronics soared 3.19 percent to 58,200 won after releasing the earnings preview indicating it likely logged the best second-quarter earnings in four years.

LG Chem rose 3.56 percent to 524,000 won, and Samsung SDI climbed 3.64 percent to 541,000 won.

LG Household & Health Care advanced 4.38 percent to 715,000 won.

Kakao was among the decliners, falling 0.68 percent to 73,000 won. Financial stocks were also bearish, with Shinhan Financial losing 1.13 percent to 35,050 won.

The local currency ended at 1,299.80 won against the dollar, down 6.5 won from Wednesday's close.

The Kosdaq gained 13.34 points, or 1.79 percent, to close at 757.97 points.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds gained 2.6 basis points to 3.249 percent, and the yield on the benchmark 10-year government bond gained 12.9 basis points to 2.93 percent.

BY LIM JEONG-WON, YONHAP [lim.jeongwon@joongang.co.kr]