(LEAD) Seoul shares open sharply higher on hope for U.S.-Iran peace talks

Lead

South Korean stocks extended their rally this week, with the benchmark KOSPI closing above the 6,000-point mark for the first time since the outbreak of the U.S.-Iran conflict. The gains came as investors bet on a second round of peace talks between Washington and Tehran, despite a U.S. naval blockade of Iranian ports and unresolved differences over the terms of a ceasefire.

On Wednesday, April 15, the KOSPI rose 123.64 points, or 2.07 percent, to close at 6,091.39, according to Yonhap News Agency. The index hit an intraday high of 6,183.21. The previous day, the index had already climbed 2.74 percent to 5,967.75, briefly touching the 6,000 level for the first time since March 3, when the market was still reacting to the Feb. 28 U.S.-Israeli strikes on Iran.

Coverage Comparison

Multiple reports from Yonhap over the past week have traced the market's upward momentum to shifting expectations around U.S.-Iran diplomacy. The initial surge began on April 14, when the KOSPI rose nearly 3 percent on hopes for renewed negotiations. That optimism was fueled by comments from U.S. President Donald Trump, who said Iran wants to reach a deal with the United States, as well as reports that the two sides had exchanged detailed terms on uranium enrichment.

The rally continued on April 15, with the index closing above 6,000 for the first time since late February. Later that day, Trump told Fox News that the U.S.-Israeli war against Iran is "very close to over," and the White House indicated that further talks would "very likely" take place in Pakistan's capital. A Pakistani delegation arrived in Tehran to help arrange another round of negotiations.

By April 16, the KOSPI had registered its third consecutive session of gains, closing at 6,226.05. That marked the first close above the 6,200-point level since Feb. 27, just before the conflict began. The index's all-time closing high remains 6,307.27, set on Feb. 26.

However, not all signals were uniformly positive. On April 20, Reuters reported that Trump said U.S. forces had seized an Iranian-flagged commercial vessel in the Gulf as part of the naval blockade. Iran called such actions a violation of the ceasefire. Reports from Iran's state media, as cited by Reuters, indicated that Tehran had no plans to participate in a second round of talks. Despite these concerns, the KOSPI was trading sharply higher that morning, adding 81.79 points, or 1.32 percent, to 6,273.71 as of 11:20 a.m.

Key Claims

• KOSPI milestones: The index crossed 6,000 intraday on April 14 for the first time since March 3, then closed above that level on April 15 for the first time since the conflict began. By April 16, it had closed above 6,200 for the first time since Feb. 27. These figures are consistent across all Yonhap reports.

• Talks and diplomacy: Reports say the first round of U.S.-Iran peace talks, held in Islamabad, Pakistan, ended without agreement. U.S. and Iranian officials were reportedly seeking a second round, according to multiple sources. Trump said Iran wants a deal, and the White House said further talks would likely take place in Pakistan. A Pakistani delegation arrived in Tehran to facilitate negotiations.

• Hormuz blockade: The U.S. military began a blockade of the Strait of Hormuz on April 13, following the breakdown of weekend talks. Trump later said the U.S. had seized an Iranian-flagged commercial vessel as part of that blockade. Iran called the seizure a violation of the ceasefire.

• Market drivers: Analysts attributed the rally to hopes for a de-escalation of the conflict and a possible reopening of the Strait of Hormuz. Lee Kyung-min of Daishin Securities said first-quarter earnings reports were emerging as an upside driver, while Lee Kyoung-min, also of Daishin, noted that "lingering uncertainties are fading away one by one."

• Investor flows: On April 14, foreigners and institutions were net buyers, while individuals sold. On April 15, foreigners continued to buy, while institutions and individuals sold. On April 16, both foreigners and institutions were net buyers, while individuals sold.

• Oil prices: Brent crude fell nearly 5 percent to below $95 per barrel on Tuesday, April 14, despite the ongoing blockade, according to Yonhap.

• Wall Street: U.S. stocks ended higher on April 14, with the Dow rising 0.66 percent and the Nasdaq gaining 1.96 percent.

• Currency and bonds: The Korean won strengthened against the U.S. dollar throughout the week, from 1,483.05 on April 14 to 1,474.1 on April 20. Bond yields saw small movements, with the 3-year Treasury yield falling to 3.328 percent on April 15 before rising slightly to 3.340 percent the next day.

Perspectives

Analysts and market participants have generally interpreted the rally as a response to perceived progress in U.S.-Iran diplomacy, despite the blockade and the failure of the first round of talks to produce an agreement. The comments from Trump and the White House were widely seen as supportive of further negotiations. At the same time, the continued blockade and reports that Tehran may not participate in further talks serve as a reminder that the situation remains fluid.

The market's resilience in the face of these mixed signals suggests that investors are increasingly focusing on the potential for a lasting ceasefire, which could ease energy-supply concerns and remove a major source of geopolitical uncertainty. However, the possibility of a breakdown in diplomacy remains a risk, as evidenced by the sharp moves that followed the initial strikes in February.