Shares rise amid speculation on Fed rate cuts

Shares ended higher Monday amid speculation that the U.S. Federal Reserve may start cutting its rates next year as inflation woes ease. The local currency rose in value against the dollar.

Screens in Hana Bank's trading room in central Seoul show the Kospi closing at 2,514.95 points on Monday, up 0.40 percent, or 9.94 points, from the previous trading session. [NEWS1]

Shares ended higher Monday amid speculation that the U.S. Federal Reserve may start cutting its rates next year as inflation woes ease. The local currency rose in value against the dollar.

The Kospi rose 9.94 points, or 0.4 percent, to close at 2,514.95.

Trade volume was moderate at 489.9 million shares worth 8.5 trillion won ($6.5 billion), with gainers slightly outnumbering losers 458 to 411.

Institutions and foreigners bought shares worth 170.7 billion won and 258.9 billion won, respectively, while individuals unloaded 412.7 billion won worth of shares.

"The Kospi gained upward momentum as expectations continued that the Fed will begin to lower interest rates next year," Kim Seok-hwan, an analyst at Mirae Asset Securities, said.

On Friday, all three major U.S. indexes rallied on growing optimism that the Federal Reserve is done raising interest rates.

The S&P 500 rose 0.6 percent to hit its highest level in over a year, the Dow Jones Industrial Average jumped 0.8 percent, and the Nasdaq Composite gained 0.6 percent.

Fed Chairman Jerome Powell has said its monetary policy is slowing the U.S. economy as expected with its policy rate "well into restrictive territory."

In Seoul, tech and battery stocks were the lead gainers.

Samsung Electronics added 0.83 percent to 72,600 won, while SK hynix dropped 1.13 percent to 131,100 won.

Battery makers LG Energy Solution rose 0.35 percent to 430,000 won, and Posco Future M shot up 10.83 percent to 348,000 won.

Shipbuilders HD Hyundai Heavy Industries and HMM soared 3.8 percent and 5.73 percent to 133,800 won and 16,780 won, respectively.

But auto shares ended in negative terrain, with Hyundai Motor down 0.66 percent to 181,600 won and Kia down 1.98 percent to 84,100 won.

LG Chem also retreated 2.77 percent to 473,000 won.

The local currency ended 1,304.00 won against the dollar, down 1.80 won from the previous session's close.

Bond prices, which move inversely to yields, closed higher. The yield on three-year government bonds fell 4.8 points to 3.529 percent, and the return on the benchmark U.S. 10-year government bonds dropped 13.3 points to reach 4.198 percent.

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