Stocks rally Tuesday with investors optimistic ahead of U.S. inflation data

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,449.54 points on Tuesday, up 65.26 points, or 2.74 percent, from the previous trading day. [NEWS1]

Stocks rallied by nearly 3 percent Tuesday as investors were optimistic ahead of the release of the U.S. inflation data, with eyes on the Federal Reserve's rate-setting policy meeting set for next week. The local currency rose against the dollar.

The Kospi advanced 65.26 points, or 2.74 percent, to 2,449.54. Trading volume was moderate at 361.7 million shares worth 9.05 trillion won ($6.58 billion) with gainers far outpacing decliners 771 to 127.

"We have optimistic sentiment for the U.S. August consumer price index, as the uptrend in energy prices has been limited, the expected inflation has slowed, and investors cheered over China's lower-than-expected August inflation data," said Seo Jung-hun, an analyst at Samsung Securities.

"The expectation that the Fed will continue its aggressive monetary tightening has already been reflected in the market, as the probability of a 75 basis-point rate hike stands at 93 percent based on the interest rate futures," Seo said.

U.S. stocks rallied Monday amid hopes that the likely slowdown in the August inflation would prod the Fed to go easy on its future rate hikes if it were to stick to its third consecutive three-quarter hike this time in the monetary policy meeting slated for Sept. 20 to 21.

In Seoul, shares closed higher across the board with tech and battery stocks leading the overall market gain.

Samsung Electronics jumped 4.5 percent to 58,100 won, and SK hynix finished up 4.87 percent to 94,800 won. Samsung SDI soared 5.43 percent to 602,000 won.

Among the decliners were defense stocks, including Korea Aerospace Industries that slumped 4.32 percent to 53,100 won and Hanwha Aerospace that dipped 4.9 percent to 77,600 won.

The local currency ended at 1,373.60 won against the dollar, down 7.2 won from Thursday's close.

The Kosdaq gained 18.98 points, or 2.44 percent, to close at 796.79 points.

Bond prices, which move inversely to yields, closed lower. The yield on three-year government bonds rose 0.8 basis points to 3.551 percent, and the yield on the 10-year government bond climbed 4.3 basis points to 3.356 percent.

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