South Korean Stocks and Won Gain on Relief Following Iran Ceasefire Agreement

South Korean Assets Surge on Iran Ceasefire

South Korean assets experienced a significant surge following President Donald Trump's agreement to a two-week ceasefire with Iran, alleviating concerns over prolonged disruptions to global energy supplies and triggering a broad risk-on move. The benchmark Kospi surged as much as 6.2%, leading gains in Asia and extending its advance for the fourth consecutive session. This marked a notable turnaround for the region, as chip heavyweights Samsung Electronics Co. and SK Hynix Inc. both jumped more than 9%.

A more than 6% jump in Kospi 200 futures also triggered a temporary halt in program trading by the exchange. The South Korean won rose as much as 1.9% against the dollar, while the nation's 10-year bond futures climbed as much as 120 ticks. The 3-year yields fell to 3.3% as lower oil prices eased inflation pressures and lowered expectations for a Bank of Korea rate hike. The central bank will hold its rate-setting meeting on Friday.

Read also: SpaceX Seeks Record $75 Billion IPO, Potentially Positioning Elon Musk as the World's First Trillionaire

The sharp drop in oil prices has lifted sentiment for one of the region's most energy-dependent economies, shifting investors' focus back to the artificial intelligence trade and corporate governance reforms. Ha SeokKeun, chief investment officer at Eugene Asset Management Co., noted that this moment appears to mark a pivot point where the market transitions from a war-risk-driven discount phase toward a normalization phase.

The won is trading at its highest level since March 11, while 10-year bond futures are at their highest since March 19. Both have rebounded to their strongest levels in about a month. The energy shock has pushed South Korea's government to take increasingly aggressive steps, including a fuel price cap, to shield the economy. Authorities have also signaled contingency plans to curb energy demand and stabilize prices, highlighting the extent of the strain on an economy heavily reliant on imported oil.

Francis Tan, Asia chief strategist at Indosuez Wealth in Singapore, noted that this is a relief buy from the earlier excessive selloffs. However, he warned that the underlying drivers of higher energy prices are unlikely to shift significantly anytime soon, as lost capacity cannot be restored quickly. Meanwhile, the ongoing back-and-forth tensions persist because trust between the nations involved cannot be rebuilt overnight. "So, buyers beware," Tan warned.