Shares surge as investors hope for rate hike halt

Shares closed higher as softer U.S. inflation data raised hopes of a halt to rate hikes and boosted investor confidence.

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,486.67 points on Wednesday, up 2.20 percent, or 53.42 points, from the previous trading session. [NEWS1]

Shares closed higher Wednesday after U.S. reports showed softer inflation data that raised hopes of an end to U.S. rate hikes. The local currency sharply gained ground against the dollar.

The benchmark Kospi gained 53.42 points, or 2.2 percent, to close at 2,486.67.

Trading volume was moderate at 413.1 million shares worth 9.22 trillion won ($7.08 billion), with gainers outnumbering losers 752 to 140.

Foreigners scooped up a net 542.3 billion won worth of domestic shares, while institutions purchased a net of 1.09 trillion won. Individuals offloaded a net 1.61 trillion won.

The Kospi opened higher tracking overnight gains on Wall Street following reports that the U.S. consumer price index (CPI), a key measure of inflation, grew at the slowest pace in October since 2021.

The CPI's slower than expected rise reinforced investor confidence that the U.S. Federal Reserve might pause, or even halt, interest rate hikes.

“Based on leading indicators of inflation, the CPI will likely stay stable through early next year with core CPI stabilized through mid-2024,” KB Securities analyst Lee Eun-taek said in a report.

“One event that requires close attention is the Fed's revised economic outlook that will be released at the Federal Open Market Committee meeting in December,” Lee added.

In Seoul, most large caps finished higher.

Samsung Electronics gained 1.98 percent to 72,200 won, with LG Energy Solution surging 3.32 percent to 451,500 won.

Hyundai Motor rose 4.17 percent to 182,500 won, and Kia jumped 4.22 percent to 81,500 won.

LG Chemical spiked up 3.23 percent to 480,000 won.

Naver rose 3.47 percent to 205,500 won, Kakao gained 4.21 percent to 48,300 won while SK Telecom stayed flat at 51,300 won.

The local currency closed at 1,300.80 won against the dollar, down 28.10 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds fell 12.0 points to 3.739 percent, and the return on the benchmark U.S. 10-year government bonds dropped 19.1 points to 4.443 percent.

BY KIM JU-YEON, YONHAP [kim.juyeon2@joongang.co.kr]