Kospi hits 2-year high with positive rate cut signal from Fed

Finance

Published: 21 Mar. 2024, 18:23

Kospi hits 2-year high with positive rate cut signal from Fed

Electronic signboards at a Hana bank branch in Seoul show the benchmark Kospi surged 64.72 points, or 2.41 percent, to close at 2,754.86, while the value of local currency also rose sharply against the U.S. dollar to finish at 1,322.40 won against the greenback on March 21, 2024.

The main Kospi bourse gained by more than 2 percent Thursday to hit the highest closing price in nearly two years thanks to growing hopes for U.S. rate cuts in the near future. A robust earnings guidance by Micron, the world’s third-largest memory chip maker headquartered in Boise, Idaho, also helped boost the prices of market bellwethers like Samsung Electronics and SK hynix.

The local currency also appreciated sharply against the U.S. dollar.

The Kospi surged 64.72 points, or 2.41 percent, to close at 2,754.86, the highest in nearly two years since April 5, 2022 when the index closed at 2,759.20.

Trade volume was heavy at 811.8 million shares worth 13.8 trillion won ($10.4 billion), with gainers outnumbering losers 655 to 217.

Both institutions and foreign investors extended their buying streaks to a second consecutive session, scooping up 1.05 trillion won and 1.87 trillion-won worth of local shares, respectively. Retail investors remained net sellers for a second straight session, offloading a net 2.9 trillion won.

The market rally followed record-high finishes on Wall Street, prompted by the outcome of the U.S. Federal Open Market Committee meeting that signaled up to three rate cuts within the year.

The Dow Jones Industrial Average climbed 1.03 percent to close at a new high of 39,512.13 on Wednesday (U.S. time), while the S&P 500 and Nasdaq also finished at record highs.

"At the FOMC meeting, the U.S. Fed maintained its plan for three rate cuts this year despite earlier concerns [over a potential delay in rate cuts]," Mirae Asset Securities analyst Kim Seok-hwan said. "Benefits to the country's semiconductor industry and others that are sensitive to economic conditions may expand along with hopes for a global economic recovery."

Most large caps finished in positive territory, with market kingpin Samsung Electronics adding 3.12 percent to 79,300 won, one day after its 5.63 percent spike on Wednesday.

SK hynix surged 8.63 percent to 170,000 won, while top pharmaceutical firm Celltrion gained 1.47 percent to 185,800 won.

Battery maker LG Energy Solution advanced 1.47 percent to 413,500 won, while local rival Samsung SDI added 0.55 percent to close at 455,500 won.

Top automaker Hyundai Motor soared 4.56 percent to 252,000 won, while its smaller affiliate, Kia Motors, remained flat at 115,700 won.

The local currency closed at 1,322.40 won against the greenback, up 17.40 won from the previous session's close.

Bond prices, which move inversely to yields, rose. The yield on three-year treasuries lost 6.5 basis points to 3.306 percent, while the return on the benchmark five-year government bonds shed 5 basis points to 3.349 percent.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]