Airline stocks rise as won-dollar exchange rate falls

[Courtesy of T’way Air]

Airline stocks surged in early trading on Monday, fueled by a drop in the won-dollar exchange rate. T’way Air shares traded at 2,690 won ($2.03) as of 9:22 a.m., up 5.91 percent from the previous session. Other low-cost carriers also saw gains in their shares, with Jin Air rising 4.62 percent, Jeju Air up 3.34 percent, and Air Busan gaining 1.04 percent. Major carriers Korean Air and Asiana Airlines were up 1.58 percent and 1.35 percent respectively.

The rally is attributed to a decline in the U.S. dollar, following Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole meeting last weekend where he hinted at potential interest rate cuts. The won-dollar exchange rate opened at 1,325.0 won in the Seoul foreign exchange market, down 3.0 won from the previous session.

Meanwhile, domestic oil-related stocks also rose sharply on Monday, driven by increasing tensions in the Middle East and speculation about U.S. interest rate cuts. Korea Petroleum shares traded at 19,230 won as of 9:20 a.m., up 6.30 percent from the previous session. Heungkuk Petroleum also rose 8.23 percent to 16,300 won, while Joongang Enervis surged 14.41 percent.

West Texas Intermediate (WTI) crude for October delivery spiked by 2.49 percent to close at $74.83 per barrel on the New York Mercantile Exchange on August 23rd, 2024. The price of Brent crude, the global benchmark, rose by 2.33 percent to settle at $79.02 per barrel.

Geopolitical tensions have also been a factor. Israeli forces and Hezbollah, a pro-Iranian militia in Lebanon, engaged in large-scale airstrikes on August 25th. Ceasefire negotiations for Gaza, held in Cairo, also ended without any tangible progress, heightening tensions in the region even further.