Seoul stocks trade higher on US-Iran deal optimism
Seoul, June 16
Seoul stocks were trading higher late on Tuesday morning, as investor sentiment was lifted following a U.S.-Iran agreement to reopen the Strait of Hormuz.
The benchmark Korea Composite Stock Price Index (KOSPI) was up 145.52 points, or 1.7 percent, to 8,691.5 as of 11:20 am, reports Yonhap news agency.
Overnight, U.S. stocks rallied after U.S. President Donald Trump said 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&P 500 rose 1.7 percent, and the tech-heavy Nasdaq 100 gained 3.1 percent, while the Dow Jones Industrial Average reached a record high.
Oil prices retreated. Brent crude fell 4.76 percent to US$83.17 per barrel, while U.S. WTI dropped 4.87 percent to $80.75 per barrel, easing concerns over inflation.
Market top-cap Samsung Electronics edged up 0.89 percent, while industry rival SK hynix rose 2.91 percent.
Defence firm LIG D&A jumped 18.82 percent after announcing a partnership with German defence firm Rheinmetall to cooperate in air defence systems.
Daewoo Engineering & Construction surged 22.71 percent on expectations of new business opportunities in the Middle East amid eased geopolitical tensions.
The Korean won was quoted at 1,513.9 won against the U.S. dollar, down 2.8 won from the previous session.
Meanwhile, South Korea's money supply continued to rise in April on an increase in short-term deposits and funds awaiting investment, central bank data showed on Tuesday.
The country's M2, a key gauge of the money supply, stood at an average of 4,153.9 trillion won (US$2.74 trillion) in April, up 0.6 percent, or 25.3 trillion won, from a month earlier, according to the preliminary data from the Bank of Korea (BOK).
The figure has been on a steady rise since November. M2 is a measure of the money supply that includes cash, demand deposits and other easily convertible financial instruments.
— IANS
Reader Comments
While Korea's KOSPI is rallying, I'm concerned about the impact on Indian markets. Our oil import bill has been a huge strain on the rupee. If oil prices stabilize below $85, it would be a massive relief for our fiscal deficit. Let's hope this agreement holds and doesn't fall apart like previous ones.
Impressive rally in Korean defense stocks like LIG D&A. Interesting how peace deals can still boost defense companies through partnerships. India's defense sector should take note - if Korea can rise 18% on a partnership, imagine what Atmanirbhar Bharat could do for HAL and BEL!
Finally some good news after weeks of volatility. But I'm cautiously optimistic - Trump's agreements have a history of being unpredictable. For India, lower oil prices mean lower petrol prices and better trade balance. Let's see if this translates into real benefits for the common man or just market gains.
The won is weakening against USD though - 1513.9! That's concerning for Korean exports but good for Indian IT companies that compete with Korean firms. Meanwhile, India's M2 money supply also grew last month. Both economies are showing similar monetary trends. Interesting correlations.
Daewoo Engineering surging 22% on Middle East opportunities! Indian companies like L&T and HCC should also benefit if Middle East infrastructure spending picks up post-peace. But one question - is this rally sustainable or just a knee-jerk reaction to a fragile deal? History suggests caution.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.