With the United States and Iran reaching a dramatic agreement just ahead of the ceasefire talks deadline, financial markets at home and abroad were greatly relieved on the 8th. The KOSPI surged by about 7%, and the won-dollar exchange rate fell by 33 won, dropping below the 1,500-won level for the first time in two weeks. International oil prices also plunged about 19% intraday, and major Asian stock markets strengthened across the board. On the sentiment that ‘a catastrophe was averted’, financial markets rebounded sharply, but assessments indicate that caution remains high until an end to the war is assured.

On the day, the KOSPI closed at 5,872.34, up 377.56 points (6.87%) from the previous day. It was the highest closing level in three weeks since the 18th (5,925.03). Intraday, it climbed as high as 5,919.60, crossing the 5,900 mark. The KOSDAQ also closed at 1,089.85, up 53.12 points (5.12%) from the previous session.

As both indices surged from the opening, a buy sidecar that suspends program buying for five minutes was triggered on each early in the session.

Since the U.S.-Iran war, foreign investors had continued heavy net selling centered on the KOSPI, but on this day foreigners were net buyers of 2.4754 trillion won on the main stock market. It was the first time in about a month since the 10th of last month that foreigners went on a ‘buy’ of more than 1 trillion won on the main board.

In particular, with foreigners' net buying concentrated in semiconductors, Samsung Electronics closed at 210,500 won, up 7.12%, and SK Hynix finished at 1,033,000 won, up 12.77%.

The exchange rate also fell sharply. In the Seoul foreign exchange market, the won-dollar rate ended the daytime session at 1,470.6 won per dollar, down 33.6 won from the previous session. On a closing basis, it fell out of the 1,500-won range for the first time in two weeks since the 25th of last month (1,499.7 won).

The 3-year government bond yield also closed at an annualized 3.315%, down 0.136 percentage point from the previous session, as domestic stocks, the currency, and government bonds all strengthened.

The change in market sentiment was largely driven by news that the United States and Iran dramatically agreed to a ceasefire that morning. Immediately after the ceasefire news broke, U.S. stock index futures and international gold prices jumped, while U.S. Treasury yields and the dollar declined.

International oil prices fell immediately, dropping below $100 per barrel. West Texas Intermediate (WTI), which had recorded the highest close since June 2022 at $112.95 the previous day, plunged 19% intraday on the ceasefire news to around $91 per barrel. Brent crude also opened with an intraday drop of more than 13%.

Asian stock markets also rose. Japan's Nikkei 255 and Taiwan's Weighted Index jumped 5.39% and 4.61%, respectively. China's Shanghai Composite and Shenzhen Composite climbed in the 2% to 4% range.

Lee Kyung-Min, an analyst at Daishin Securities, said, "Korea's financial markets have been under all-around pressure during this phase of geopolitical risk and surging oil prices," adding, "As concrete schedules, venues, and participants for face-to-face (ceasefire) talks were specified, expectations for substantive end-of-war negotiations flowed in."

However, there are concerns that it is still too early for markets to relax. Oh Jae-Young, an analyst at KB Securities, said, "It still appears difficult for U.S.-Iran talks to reach a compromise within two weeks," adding, "The negotiations over the next two weeks will be an important period for commodities and financial markets, as well as global supply chains and inflation."