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Stocks gain 1.31 percent on Fed rate cut hopes

June 11,2019
Korean stocks gained more than 1 percent to rise for the third consecutive session on Monday amid hopes for U.S. Federal Reserve interest rate cuts and eased tax friction between the United States and Mexico. The won depreciated against the dollar.

The benchmark Kospi climbed 27.16 points, or 1.31 percent, to 2,099.49. Trading volume was moderate at 452.1 million shares worth 4.13 trillion won ($3.57 billion).

The benchmark Kospi gained for the third consecutive session after Fed Chairman Jerome Powell left the door open for rate cuts later this year to bolster the world’s largest economy amid the escalating trade war between the world’s top two economies.

“News of a tariff agreement reached by the United States and Mexico, and hopes for an eased trade war between the United States and China positively affected the local stock market,” said Seo Sang-young, an analyst at Kiwoom Securities.

He said China’s export growth for May also pushed up the benchmark Kospi.

Individuals sold a net 338.4 billion won worth of stocks and foreign investors bought a net 182.4 billion won worth of shares. Institutions bought a net 166.8 billion won of stocks.

Most large-cap shares closed higher, with tech and auto stocks leading the gain.

Hyundai Motor, the nation’s top automaker, increased 2.14 percent to 143,000 won and Kia Motors rose 4.5 percent to 43,000 won on news that U.S. President Donald Trump called off a plan to impose tariffs on Mexico after the two countries reached an agreement on immigration.

Market kingpin Samsung Electronics gained 1.36 percent, closing at 44,800 won. SK Hynix finished 2.14 percent higher at 66,800 won.

Chemical companies were also strong, with top player LG Chem advancing 1.97 percent to 337,000 won. Lotte Chemical moved up 0.78 percent to 258,000 won.

Pharmaceutical firms were mixed, with Celltrion gaining 1.02 percent to reach 198,500, while Samsung BioLogics was unchanged at 305,500 won.

The Kosdaq rose 4.61 points, or 0.64 percent, to end the session at 721.14. The tech-heavy index was lifted by institutional and foreign selling of IT shares and a 1.7-percent rise in Nasdaq Biotechnology Index overnight.

The won closed at 1,185.2 won against the dollar, up 3.8 won from the previous session’s close.

Bond prices ended mixed. The yield on three-year bonds fell 0.4 basis points to 1.53 percent. The yield on 10-year bonds rose 0.5 basis points to 1.66 percent.

BY KIM HE-YU, YONHAP [kim.heyu@joongang.co.kr]