Kospi Reclaims 8,700 on US-Iran Truce Deal, Oil Slide; Financial Shares Hit 52-Week Highs

South Korea’s Kospi reclaimed the 8,700 level on June 16 as news of a US-Iran agreement to end the war and falling oil prices lifted investor sentiment.

The benchmark index closed up 180.62 points, or 2.11%, at 8,726.6. It opened higher on optimism over the US-Iran accord, but briefly turned negative after the Bank of Japan raised interest rates.

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US Vice President JD Vance, Washington’s chief representative in talks with Iran, said in a media interview that the US and Iran electronically signed a memorandum of understanding to end the war on June 14. Senior US officials confirmed the development in separate briefings. The electronic signing came ahead of a formal ceremony set for June 19 in Geneva, Switzerland.

The deal pushed oil prices lower. Brent crude futures, the global benchmark, settled at $83.2 a barrel, down 4.9% from the previous session, while West Texas Intermediate futures fell 4.8% to $80.75 a barrel. Both posted their lowest levels in three months, since March 10 in the early stage of the war.

The Bank of Japan raised its benchmark rate to the highest level in 31 years amid inflation concerns. After a monetary policy meeting on June 16, the central bank lifted its short-term policy rate by 25 basis points to about 1% from about 0.75%. Japan’s benchmark rate had not reached the 1% level since September 1995.

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Foreign and institutional investors led the advance. On the Kospi, foreign investors were net buyers of 1.537 trillion won and institutions purchased a net 704 billion won. Retail investors were net sellers of 2.183 trillion won.

Most large-cap Kospi stocks rose. Samsung Electronics and SK Hynix, the market’s two semiconductor heavyweights, gained 1.78% and 4.11%, respectively. The move followed a sharp rally in chip stocks on Wall Street overnight, including a gain of more than 10% for Micron Technology.

LIG Defense & Aerospace surged 18.58% on expectations for European orders, while Hanwha Aerospace climbed 9.13%. Mirae Asset Life Insurance, Hana Financial Group and KB Financial Group each hit fresh 52-week highs on expectations of interest-rate increases in the second half.

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The Kosdaq index fell more than 1%. It closed down 1.48% at 1,018.68. On the Kosdaq market, foreign and institutional investors were net sellers of 310 billion won and 463 billion won, respectively, while retail investors were net buyers of 784 billion won.

The won edged lower. In Seoul trading, the currency ended the daytime session at 1,511.6 per dollar, down 0.5 won from the previous session.

Noh Jung-dong, Hankyung.com reporter dong2@hankyung.com