KOSPI, won rise as Trump, Iran signal potential easing of tensions

The closing prices of KOSPI and Kosdaq are displayed on an electronic board at the dealing room of Hana Bank in Seoul, Wednesday. The benchmark KOSPI ended up 426.24 points, or 8.44 percent, at 5,478.70, snapping a five-session losing streak. The secondary bourse Kosdaq also rebounded, rising 63.79 points, or 6.06 percent, to close at 1,116.18, ending a three-day decline. Yonhap

Korea’s benchmark KOSPI jumped sharply Wednesday, with the won rebounding after days of losses, as hopes for an end to the Iran conflict strengthened following remarks by U.S. President Donald Trump that U.S. forces could end their military campaign in Iran within two to three weeks.

KOSPI, which had extended its record-breaking rally after surpassing 6,300 points in late February, slid 12.61 percent over the course of March following the outbreak of the Middle East conflict.

A day earlier, the index had fallen about 4 percent to the 5,050 level, but rebounded at the open, surging 277.58 points, or 5.49 percent, to 5,330.04.

A buy-side sidecar was triggered early in the session after KOSPI 200 futures climbed 5.19 percent, temporarily suspending program buy orders. The Korea Exchange said the measure took effect at 9:07 a.m.

A KOSPI sidecar is activated when futures gain more than 5 percent from a reference price and maintain that level for at least one minute, halting program buy orders for five minutes.

KOSPI closed at 5,478.70, up 426.24 points, or 8.44 percent.

The secondary Kosdaq also posted a sharp rise. It opened 37.97 points, or 3.61 percent, higher at 1,090.36 and continued to climb. A buy-side sidecar was also triggered at around 2:08 p.m. as Kosdaq 150 futures and the Kosdaq 150 index advanced 6.06 percent and 5.99 percent, respectively.

A Kosdaq sidecar is triggered when Kosdaq 150 futures jump more than 6 percent from a reference level and the Kosdaq 150 index gains more than 3 percent from the prior close, with both moves sustained for at least one minute.

The activation marked the first Kosdaq buy-side sidecar since March 6. The index closed at 1,116.18, up 63.79 points, or 6.06 percent.

The turnaround in market sentiment was driven by remarks from Trump, who said the conflict with Iran could end “very soon,” pointing to a possible timeline of two to three weeks, during a White House event on Tuesday (local time).

The White House added that Trump will deliver a public address at 9 p.m. Wednesday (10 a.m. Thursday Korea time) to provide an update on the situation.

Iran, which had maintained a hard-line stance until recently, also signaled a softer position. Iranian President Masoud Pezeshkian said his country had the “necessary will” to end the conflict if conditions are met, particularly "the guarantees" that the United States and Israel halt further attacks.

The Korean currency also rebounded. In Seoul’s onshore foreign exchange market, it opened at 1,508.5 won per U.S. dollar, improving in value by 21.6 won from the previous session, and later closed at 1,501.3 won per dollar, strengthening by 28.8 won.

A day earlier, the currency had dropped in value to around 1,530 won per dollar, its weakest since 2009 during the global financial crisis, before regaining stability.

Amid expectations of easing tensions in the Middle East, global crude prices also declined. Brent crude, the global benchmark, fell 3 percent to about $103 a barrel, while U.S. West Texas Intermediate crude dropped 1 percent to around $101.

“Markets appear to be pricing in stronger-than-ever expectations for an end to the conflict after the United States and Iran, which had recently sent mixed signals on a ceasefire and negotiations, delivered similar messages on the same day,” said Kim Seok-hwan, an analyst at Mirae Asset Securities.